{"id":1465,"date":"2018-08-09T00:00:00","date_gmt":"2018-08-09T00:00:00","guid":{"rendered":"http:\/\/www-staging.carta.com\/sg\/blog\/private-is-the-new-public\/"},"modified":"2021-03-05T06:58:09","modified_gmt":"2021-03-05T06:58:09","slug":"private-is-the-new-public","status":"publish","type":"post","link":"https:\/\/www-staging.carta.com\/sg\/blog\/private-is-the-new-public\/","title":{"rendered":"Private is the new public"},"content":{"rendered":"\r\n

When a venture-backed startup has consistently high growth and has already taken tens of millions of funding, it used to be a given that they\u2019d go public. But the tides are turning.<\/p>\r\n

At Carta, we\u2019ve been thinking deeply about liquidity<\/a> and the future of private and public markets since our founding. We believe that in the near future, the most successful companies will opt to stay private, and going public will be a less common path.<\/strong><\/p>\r\n

Given this, we were excited when Elon Musk, CEO of Tesla, tweeted yesterday about taking Tesla private<\/a>. Due to Musk\u2019s success in areas from building tunnels and going to space to making autonomous cars, his rhetoric quickly turns into a trend. Because of his now infamous tweet, the case for corporations to either go private, or stay private, is top of mind. The benefits of being a private company and the process for going private are now being widely shared.<\/p>\r\n

How can companies stay private?<\/h3>\r\n

While it is currently possible to stay private and get liquidity, we still need new technology to make this a more realistic option for more companies. We imagine a not-so-distant reality where private company liquidity is readily available at scale, and companies have more options than going public or getting acquired. CEOs and CFOs will have the opportunity to choose their shareholders and allow employees to realize the upside of their stock options beyond paper gains. An open and controlled marketplace will exist in real-time. Companies like Tesla could see thousands of equity transactions a day as a private company.<\/p>\r\n

Go public, go private, or stay private?<\/h3>\r\n

Going public, while a great way to raise money, isn\u2019t always the happy ending it appears to be when executives crowd around the podium on a stock exchange floor on IPO debut day. Compliance and regulation costs to go public are high, as is the scrutiny on public companies. Being public puts pressure and focus on quarterly earnings and short-term strategies, which can distract from long-term strategy and high-risk\/high-reward opportunities. Outside research backs up that these challenges have already caused a decrease in publicly traded companies: “About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.” (Bloomberg, 2018<\/a>)<\/p>\r\n

At Carta, we\u2019re invested in creating a future that enables entrepreneurs, investors, and employees to manage equity in the way that works best for the company\u2014whether they stay private, go public, or go private again.<\/strong><\/p>\r\n

Here\u2019s how we think about the options:<\/p>\r\n

\"\"<\/p>\r\n

Going public is often thought to be the ultimate mark of entrepreneurial success, but in the future staying private will be just as well regarded, if not more.<\/p>\r\n

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Additional reading: Going public is already on the decline<\/h3>\r\n