Startup stock tenders are on the rise
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Venture capital's distribution drought isn't parching all employees of VC-backed companies, thanks to a growing number of private stock tenders.
By the numbers: Tender activity climbed 44% year-over-year in Q3 2024, according to new data from Carta, which is one of the largest startup equity and VC fund administrators.
- There were 26 such offers via Carta between July and September, the highest quarterly total in over two years.
Zoom in: Earlier-stage companies are getting in on the act, representing about half the recent volume.
- That's quite different from 2021, for example, when over 80% of the offering came from companies that were Series C or later.
Coming attractions: The new Carta data doesn't include the massive $1.5 billion tender that OpenAI just signed with SoftBank, which applies to current and former employees so long as they have at least two years of tenure.
- Nor the one announced today by Veeam. Nor the one that Databricks is said to be prepping.
The big picture: This feels like venture capital exacerbating its own problem. Yes, some of these tenders help early investors get liquidity, but the real upshot is to let IPO-skittish founders stay private longer.
- Carta, however, views it a bit differently, pointing out that there is historical correlation between tenders and IPOs, suggesting that an IPO boom could be a year or two away. On the other hand, that history dates back to just after the Great Financial Crisis.
The bottom line: There are willing buyers and willing sellers, and no reason to expect that dynamic to change any time soon.
