A few weeks ago, I wrote about what I called “the ghosting nobody talks about.” It wasn’t about dating, although the emotional pattern is surprisingly similar. It was about founders who walk out of a promising investor meeting convinced they’ve found a partner, only to watch the emails become less frequent, the enthusiasm fade, and eventually the conversation disappear altogether.
At the time, I framed it as a funding problem. Startups need capital. Investors have become more selective. The market is uncertain. End of story.
Or so I thought.
It all started with a conversation with my former boss at Zelle, Aaron Bartrim which got me to be curious about what was truly behind the curtain. The more conversations I’ve had since then with founders, fund managers, accountants, tax specialists, and people who spend their lives operating the machinery behind private markets - the more I’ve come to believe I was looking at the symptom, not the disease.
Silicon Valley doesn’t have a capital problem.
It has a flow problem.
Those aren’t the same thing.
When people hear that venture funding is down, the natural conclusion is that the money has disappeared. But it hasn’t. Institutional investors still manage trillions of dollars. Family offices continue searching for returns. Pension funds are increasing their exposure to alternative investments. Private equity and private credit continue to grow. Even retirement accounts, historically confined to public markets, are slowly beginning to look toward private investments.
The capital exists.
What doesn’t exist—at least not at the scale we’re about to need—is the infrastructure required to move that capital efficiently through an increasingly complex investment ecosystem.
That distinction matters.
Because if the problem were simply “not enough money,” the solution would be straightforward: create more investors.
But if the problem is that the existing capital is struggling to move through outdated operational processes, then we’re solving the wrong problem entirely.
I’ve seen this movie before.
For most of my career, I’ve worked on infrastructure. Payments. Identity. Mobile platforms. Developer ecosystems. The funny thing about infrastructure is that nobody notices it while it’s working. Nobody congratulates the electrical grid every time they flip on a light switch. Nobody thinks about DNS when a website loads. Nobody thanks payment rails after tapping their phone to buy a coffee.
Infrastructure is invisible by design.
Until it isn’t.
Then suddenly everyone discovers that the most important product wasn’t the application sitting on top. It was the plumbing underneath.
Private markets are quietly approaching one of those moments.
The warning signs aren’t dramatic. There’s no spectacular outage. No flashing red dashboard. Just an ever-growing accumulation of operational friction hiding beneath record levels of innovation.
Every successful startup creates more investors.
Every new fund creates more partnerships.
Every new acquisition creates more reporting.
Every successful ecosystem creates more administrative complexity than the one before it.
Innovation compounds.
Paperwork compounds even faster.
Today, approximately 45 million Schedule K-1s are generated every year across the United States. Industry projections suggest that number could reach 65 million by 2028. If retirement plans gain meaningful access to private markets—a direction many believe is inevitable—that number could climb by another ten million.
Think about that for a moment.
We’re not talking about emails.
We’re not talking about invoices.
We’re talking about more than seventy million highly structured tax documents flowing between fund managers, administrators, accounting firms, investors, tax preparers, software platforms, and financial institutions.
And much of that ecosystem still behaves as though PDFs and spreadsheets are an acceptable integration strategy.
The consequences extend far beyond tax season.
I’ve heard estimates suggesting that roughly $40 billion of institutional capital is effectively delayed or constrained by operational reporting friction. Whether the exact number is thirty, forty, or fifty billion almost misses the point. Even if the estimate were half that size, we’re still talking about tens of billions of dollars whose velocity is being reduced not by market conditions, but by administrative complexity.
That’s an astonishing thought.
We’re accustomed to thinking that innovation slows because entrepreneurs run out of ideas or investors become too cautious.
What if innovation is slowing because our financial plumbing hasn’t kept pace with the markets it was built to serve?
That’s a much less glamorous explanation.
It’s also a much more solvable one.
History suggests we’ve solved this kind of problem before.
Retail payments once suffered from exactly the same disease. Every bank optimized its own systems. Every institution built proprietary processes. Consumers experienced the friction without ever seeing the machinery causing it. It wasn’t until competitors agreed to cooperate on shared infrastructure that payments became fast enough, reliable enough, and simple enough to disappear into everyday life.
The greatest compliment we can give infrastructure is that we forget it exists.
Private markets haven’t reached that point yet.
They’re still asking every participant to compensate for the plumbing instead of benefiting from it.
Eventually, that stops scaling.
And when it does, the bottleneck won’t be imagination.
It won’t even be capital.
It will be paperwork.
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