The 2021 Carta liquidity report

The 2021 Carta liquidity report

Author: Peter Walker
Read time:  2 minutes
Published date:  25 January 2022
The movement toward secondary liquidity in the private markets is accelerating fast: Carta completed four times as many secondary transactions for private companies in 2021 than the year before.

U.S. venture capitalists had a tremendous year in 2021, smashing all previous annual fundraising records. Total funds raised last year topped $128 billion—approximately 50% higher than the previous record of $85.8 billion raised in 2020. Venture funds invested surpassed the $300 billion mark for the first time, clocking in at $329.8 billion for the year.

Against this background, an even stronger trend emerged: the movement toward private market liquidity. Carta completed 129 secondary liquidity transactions for private companies in 2021—more than 4x the total conducted in 2020. Dollars transacted rose from $2.2 billion in 2020 to $7.4 billion in 2021. Liquidity momentum also diversified across geographies: Companies outside California initiated 47% of secondaries on Carta in 2021, compared with just 35% in 2019.

Graph showing cumulative transaction value on Carta by year

Industry observers have predicted that as the average time for VC-backed companies to exit grows, investors would turn to secondary liquidity to extract value from large, mature private companies. But Carta’s 2021 data shows that those factors are now only part of the story. Last year’s dramatic movement toward secondary transactions was distributed across private companies of all sizes and funding stages. Of companies that conducted secondary transactions on Carta in 2021, 46% were under a $1 billion valuation as of their most recent post-money valuation

Histogram showing 2021 liquidity programs by most recent round raisedHistogram showing 2021 liquidity transactions by most recent post money valuation

The broad-based movement toward liquidity suggests that longer timelines to IPO aren’t the only reason that companies are seeking liquidity. Secondaries also provide a way for companies to bring new investors onto their cap tables without the dilution associated with a primary round of financing. And in today’s competitive labor market—particularly in the VC-backed tech economy—secondary liquidity events can also be a way for companies to improve employee recruitment and retention by making equity compensation meaningful

To learn more about how the movement toward liquidity has accelerated, including data analysis of liquidity transactions by geography and industry, download Carta’s 2021 liquidity report.  

Peter Walker
Author: Peter Walker
Peter Walker runs the Insights team at Carta, focused on discovering key data and narratives across the private capital ecosystem. In a former life, he was a marketing executive for a media analytics startup and led the data visualization team at the Covid Tracking Project.