Sourcery• Mar 21, 2025• 1:11:13Interview

SpaceX, Stripe, Ramp, Anduril: Navigating Liquidity in Private Markets

From Sourcery

Christian Garrett•Partner, 137 Ventures

Executive Summary

The average time a tech company stays private has quadrupled to over 12 years, driven by abundant private capital and regulatory changes like the 2012 JOBS Act.
Tender offers (secondaries) have become a primary mechanism for providing employee liquidity and for investors to access elite, capital-efficient companies like SpaceX that no longer need to raise primary funding.
There is a significant and growing convergence between the tech industry and government, driven by geopolitical competition and the need for technological supremacy, as exemplified by the Hill and Valley Forum.
While a "second Cold War" and increased NATO spending create tailwinds for defense tech, the sector is viewed as currently overrated by venture investors, with a likely "winner-take-most" market dynamic.

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Concerns Raised

The defense tech sector is currently overrated and crowded with venture investment.
The venture industry is becoming increasingly consensus-driven, making it harder to find contrarian opportunities.
Global geopolitical volatility creates market dislocations and uncertainty.

Opportunities Identified

Investing in 'generational' private companies through secondary tender offers as they stay private longer.
Capitalizing on the convergence of technology and government, particularly in national security.
Finding value in the expected increase in European domestic defense spending.
Identifying underlooked investment opportunities created by market volatility and shifts.

Key Themes

The New Private Market Paradigm

Companies are staying private significantly longer, shifting from 3-4 years in the 2000s to over 12 years today. This trend is fueled by trillions in dry powder from private equity and venture capital, as well as structural changes like the JOBS Act, which increased the shareholder limit.

This fundamental market shift means more value is created and captured in private markets, making late-stage venture and secondary investments a critical strategy for accessing high-growth companies.

Tender Offers as a Liquidity Engine

With IPOs delayed, company-led tender offers have become a crucial tool for providing liquidity to employees and early investors. For capital-efficient, cash-flow positive companies like SpaceX, these secondary transactions are often the only way for new investors to gain exposure.

Understanding and participating in tender offers is now a core competency for late-stage investors, serving as a primary access point to top-tier private technology companies.

The Convergence of Tech and Government

A strategic realignment is occurring between Silicon Valley and Washington D.C., fostering collaboration on policy and national security. Initiatives like the Hill and Valley Forum are creating bipartisan platforms for dialogue between tech leaders and policymakers to ensure American technological supremacy.

This public-private partnership is creating new markets and influencing regulation, making engagement with the policy landscape essential for investors and founders, particularly in sectors like defense, AI, and fintech.

Geopolitics Reshaping Defense Investment

The current geopolitical climate, described as a "second Cold War," is forcing NATO allies to increase defense spending. This is expected to drive significant investment into the domestic defense industrial base of European nations, potentially shifting procurement away from U.S. suppliers.

This creates both opportunities and risks. While the overall market is growing, investors must be selective, as the defense tech space is considered crowded and will likely consolidate around a few dominant players.

Policy as a Market Catalyst

Specific government actions have directly enabled massive technology markets. The JOBS Act allowed companies to stay private longer, the Durbin Amendment was foundational for the modern fintech industry, and Palantir's litigation forced the DoD to consider commercial software.

This demonstrates that policy is not a peripheral concern but a core driver of technological innovation and market creation. Investors and operators who understand and anticipate these legislative shifts can gain a significant competitive advantage.

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Topics

Late-Stage Venture Secondary Markets Tender Offers Private Markets Liquidity SpaceX Defense Tech Geopolitics NATO Government Policy JOBS Act Durbin Amendment Hill and Valley Forum Public-Private Partnership Capital Efficiency

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