Private Equity Secondaries

For the first time in venture history, three distinct channels share the liquidity burden roughly equally. A decade ago, secondaries barely registered. They accounted for roughly 3% of exit value in 2015. Today they claim 31% : nearly $95b in the trailing twelve months. The shift accelerated after 2021’s IPO bonanza. When public markets closed their doors in 2022, investors found alternative routes. Secondaries absorbed demand that would have flowed to traditional exits. When Goldman Sachs acquired Industry Ventures, the transaction signaled secondaries have arrived. Morgan Stanley followed with EquityZen, then Charles Schwab announced its acquisition of Forge Global. Wall Street recognized the structural change before most of venture did. This matters for founders & investors. When IPOs dominated exits, fund models assumed a small number of public offerings would generate the bulk of returns. Now liquidity arrives through multiple doors. A founder might sell secondary shares to patient capital while the company remains private. A GP might move positions through continuation vehicles. An LP might trade fund stakes on an increasingly liquid secondary market. The 830 unicorns holding $3.9t in aggregate post-money valuation cannot all exit through IPOs. The math doesn’t work. At 2025’s pace of 48 VC-backed IPOs, clearing the unicorn backlog would take seventeen years. Secondaries provide a release valve that traditional exits cannot. Companies like OpenAI have embraced this reality, running employee tender offers while voiding unauthorized secondary transfers. The largest private companies now manage their own liquidity programs rather than waiting for public markets. Today, secondary liquidity concentrates in the top 20 names. SpaceX, Stripe, OpenAI. For the founder of company #50, the secondary market remains largely theoretical. For secondaries to succeed as a broad asset class, buyers must underwrite positions in companies without household recognition. As the market grows, this coverage gap becomes opportunity. For LPs starved of distributions since 2022, the expansion of secondary channels offers hope. The $169b in cumulative negative net cash flows needs somewhere to go. More exit paths mean more opportunities to return capital. When a Series B employee asks about liquidity today, the answer isn’t “wait for the IPO.” It’s “we’re planning a tender offer next year.” A decade ago, secondaries were a footnote. Now they’re infrastructure. Liquidity flows where it can, not where tradition suggests it should.

For the first time, US VC secondary sales exceeded IPO exit value Here's why this matters 👇 ◾️ The numbers are clear (Jun 24' - Jun 25'): - Secondary transactions: $61.1B - IPO exits: $58.8B This isn't a close race anymore. Secondaries have officially overtaken public markets as the primary liquidity mechanism for VC. Here's what's behind this shift. ◾️ Let's walk through each driver, starting with the biggest one: companies staying private longer. The average time to IPO has stretched from 4 years (1999) to 11+ years today. Stripe, OpenAI, and other unicorns have zero rush to go public. Why deal with public market volatility when you can access capital privately? ◾️ Driver #2: The SPV explosion is wild. The data: - 545% jump in secondary SPV count (2 years) - 1,000% growth in total value raised What was once a niche financing tool is now the backbone of venture liquidity infrastructure. ◾️ Driver #3: Tender offers became routine. Companies like Ramp now regularly offer employees liquidity through structured tenders. I think this shift is brilliant – it's simultaneously: - Employee retention tool - Pressure release valve for early stakeholders - Recruitment advantage ◾️ Driver #4: Sector concentration amplifies everything. Hot sectors driving secondary demand: - AI companies (obvious winner) - Cybersecurity (Trump priorities) - National defense (geopolitical focus) When everyone wants exposure to the same 50 companies, secondary markets heat up fast. ◾️ Now, let's talk about what this really means. Here's my contrarian take: this "success" masks a structural problem. When your primary exit strategy becomes "sell to other VCs," you've created a closed loop that doesn't generate real wealth for the broader economy. ◾️ The sustainability question keeps me up at night. The math: - Secondary markets provide liquidity - But they don't create new value like IPOs do - You're shuffling existing equity around Instead of accessing true growth capital from public markets. ◾️ What does this mean for GPs? You need secondary market expertise now. Your LPs will ask about: - Tender offer strategies - Secondary SPV structures - Alternative liquidity plans This isn't optional anymore – it's table stakes for fundraising. ◾️ What does this mean for LPs? I assume you'll see more secondary-focused strategies in GP pitches. But ask the hard question: are you getting exposure to real growth, or just paying higher prices for the same assets in a closed ecosystem? ◾️ Bottom line: we're witnessing a fundamental shift in how VC creates and distributes liquidity. The data supports it. The trend is accelerating. But eventually, this ecosystem needs real exits to public markets. The question is when, not if, this dynamic reverses. What do you think about the state of secondaries market?

Private Thoughts From My Desk…….#40   The secondary market is warming up.   That is the unambiguous message from the Campbell Lutyens 1H 2025 report. With $110 billion in volume during the first half alone, this market is now operating at a scale and speed few would have imagined even two years ago. But beyond the headline figures, what stood out to me most was the continued evolution of GP-led deals—specifically, the fact that over half of these transactions priced at or above par (See chart below).   Yes, you read that right. Par. In a secondary market.   This is not just a technical pricing detail. It is a signal that something fundamental is happening in private markets. GP-led secondaries are becoming the preferred path for some of the best-performing assets in private equity. Pricing at or above par is not just a win for GPs and existing LPs. it is a reflection of intense demand among buyers who are now competing for access to scarce, high-quality paper.   What’s driving this pricing strength? A few things stood out. First, the selection bias. GPs are not bringing just any asset to market. They are bringing trophy assets. Cash generative. Durable. Often tech-enabled or exposed to long-term secular tailwinds. That kind of quality commands a premium in today’s environment.   Second, the supply-demand balance has shifted. Dedicated GP-led vehicles now control more than $31 billion of dry powder. Traditional secondary funds continue to raise more capital and do more GP-led deals. Sponsors have pricing leverage they simply did not have before.   And it’s not just single-asset deals that are seeing the love. Multi-asset continuation vehicles—long considered a harder sell due to structural complexity—are also seeing meaningful momentum. In fact, 44% of MACVs priced at or above par, a staggering jump from just 28% in 2024. This tells me the market is heating up. This is a trend. The presence of evergreen vehicles and more specialized capital has added further depth to the buyer pool. The result is a more liquid, more competitive, and more pricing-efficient market.   For GPs, the message is clear. The secondary market is no longer just a tool for liquidity. It is now a strategic extension of fund management. And for LPs, pricing at or above par is a signal that continuation vehicles, once viewed with a touch of skepticism, are delivering real value.   If this keeps up, we may need to start treating the secondary market as one of private equity’s most dynamic growth engines. #privateequity #privatemarkets #privatethoughtsfrommydesk

Private markets are changing. As companies stay private longer, secondary markets are evolving from a niche liquidity tool into core infrastructure. What started as occasional tender offers has become something much bigger. At SXSW, I’ll be moderating a conversation with leaders at the center of that evolution. Tom Callahan, CEO of Nasdaq Private Market, put it this way: “Secondary liquidity programs, like tender offers, are becoming part of the capital strategy. They keep employees motivated by providing liquidity along the way. They allow early shareholders to participate in the value they helped create. And they create room for new investors to gain exposure to some of the most innovative private companies in the world. As they become more common, a third path is emerging for founders. It’s no longer just IPO or M&A. Staying private indefinitely — supported by systematic secondaries — is increasingly a viable option. That shift is driven by growing demand for liquidity and access to private markets. And with that demand comes responsibility. The ecosystem has to mature, with better data, greater transparency, and infrastructure built for scale.” Jared Carmel, Founder and Managing Partner at Manhattan Venture Partners, adds: “The best companies treat secondary like a financing round, not a cleanup exercise. They bring the same rigor, the same data, the same support they would for a primary. That’s the difference between episodic transactions and real infrastructure.” Eric Yi, Head of Secondary Private Markets at Citi, notes: “Seven private companies now have a valuation of $100B or more. The secondary market enables investors to unlock material returns that were historically reserved for IPOs and strategic takeouts. This is increasingly evident through the growth of secondary funds, tender offers, and open-market single-name transactions. As companies remain private for longer and the venture ecosystem expands, secondary market activity is accelerating alongside these secular trends. Additional developments include the growth of SPVs and increased participation from strategic investors. As the venture market continues to mature, the demand for liquidity solutions will only intensify.” Secondaries are no longer “secondary”. They are becoming a defining layer of the modern private company lifecycle. As private markets become core arenas for growth, companies stay private longer, and access broadens, so does the need for institutional-grade intelligence on private companies and private markets. Looking forward to the discussion at Capital Factory on 3/14 during SXSW. Join us!

Did the private markets in the UK become a little more open? The London Stock Exchange announced last week that they’ve partnered with Crowdcube, meaning retail investors on Crowdcube can now take part in share auctions on the LSE’s Private Securities Market (PISCES). Why does this matter? Because for the first time, everyday investors could get access to later-stage private companies the kind that have typically out of reach unless you were a VC or institutional investor. This partnership could help: ✅ Founders and early team members realise some value without rushing to IPO. ✅ Private companies stay independent for longer while still offering liquidity. ✅ Retail investors share in the upside of scaling companies. It could impact how VCs manage liquidity too. Many funds have been sitting on paper gains with limited routes to exit until an acquisition or IPO. And the IPO route has been further away and less buoyant to say the least. A structured secondary market like PISCES could allow funds to sell small portions of their holdings earlier this recycling capital into new investments, managing fund timelines more flexibly, and creating real price discovery in the private markets. If it works, it could start to reshape private market liquidity in the UK (and stop the drift away from the UK for later and growth stage companies): This is a positive step towards democratising access to the private markets. As someone who cares deeply about inclusion and levelling the playing field in investment, I think this LSE/Crowdcube partnership offers value for founders, investors, and employees alike. What do others think? I am interested in what those working on secondaries have to say 👇

Secondaries Are Quietly Taking Over Not a niche anymore. A core strategy for uncertain times. What raised 30% of all private equity capital last quarter—and why aren’t more people talking about it? Secondaries aren’t just a side dish anymore. In Q1 2025, they accounted for 30% of all global PE fundraising—the highest share ever recorded. That number was inflated by one $30B fund close. But don’t let the outlier distract you from the trend. This is structural. Not cyclical. Here’s what’s changed: - LPs want liquidity without giving up exposure. - GPs need more time—and vehicles—to unlock value. - Everyone’s under pressure from slower exits and longer J-curves. Secondaries offer flexibility, price transparency, and faster capital recycling. From my CIO seat, they’ve moved from “interesting” to essential. It’s also where dislocation becomes investable. Discounts are real. Quality is up. And vintage diversification is built-in. What we’re watching - Continuation fund terms and volume - Discount levels in LP-led deals - Secondary pricing trends vs. reported NAVs Investor action plan - Reframe your allocation lens: Secondaries aren’t just tactical—they’re foundational. - Monitor manager selection: Skill dispersion is wide in secondaries. - Match secondaries to outcomes: Want cash flow? Vintage diversity? - Quicker turns? Clarify the goal. If the front door of private equity is slow, the back door is now an opportunity in itself. #bealtetnative #alternativesforall

Private market secondaries, from 2022-2023, experienced fundraising growth in excess of ~100%—the highest of any sector.* Key driving factors of this growth are post-ZIRP portfolio rebalancing as a byproduct of over-exuberance (denominator effect), a relatively closed IPO window, muted M&A activity, and the private markets valuation “lag”, among others.  This broader market reset and increasing robustness of secondaries markets can present a compelling opportunity for private market investors. Investors should broadly consider how their portfolios are positioned with respect to the valuation lag—on both sides—situationally executing dispositions and adding exposure, where favorable.  For example, in 2022, the unprofitable public markets tech index was down ~70% and private market valuations remained largely unchanged—we took this opportunity to conduct a full review of our portfolio exposure to high-growth, unprofitable portfolio companies. As a result, we exited a significant amount of such exposure.   And now, nearing the end of 2024, the converse is largely true—private market valuations have generally lagged those of their public market counterparts—creating a situation where adding exposure via secondaries can be attractive in select pockets of the market.   For example, in private equity, there are instances of indiscriminate selling for both single-asset exposures and LP interests at relatively low multiples (<6x EBITDA) with durable cash flow and strong fundamentals. In such a case, adding exposure can offer favorable risk/return asymmetry.    Here’s a quote from one of our investment partners regarding the opportunity in private equity continuation vehicles, “80-90% of the LPs on the other side of the trade (i.e., the sellers), didn’t even look at the data room.”   Investors should have a deep understanding of underlying valuation policies, actively monitor their exposures, and be proactive in secondaries to create value for clients and generate excess return.  *Source: Pitchbook, 2024.   

Emerging markets often suffer from deeper issues than just capital scarcity. Money gets locked in illiquid structures, unable to recycle or respond when needs evolve. A recent ImpactAlpha story (https://lnkd.in/erhUAhRy) highlights a promising shift: nascent secondary markets are forming for stakes in EMDE impact funds, alongside initiatives like the Octobre Liquidity Guarantee Facility, launched with EU support to offer LPs fast exits within 10 days. It’s exactly this kind of liquidity architecture that we argued is missing in our blended finance report (https://lnkd.in/e2zyYdUw) particularly in the liquidity section. We discussed how opaque, locked-in capital dampens investor appetite and prevents capital from flowing to where it's needed most, especially when capital patience wears thin or conditions shift. Secondary markets and liquidity guarantees aren’t just nice-to-haves, they unlock capital velocity. As ImpactAlpha puts it, liquidity transforms impact funds from “patient capital prisons” into flexible, recyclable pools that can muster new deals and adapt dynamically. That’s essential because in many EMDEs, limited use of capital markets and narrow investor bases mean that once capital is deployed, it’s almost impossible to free up. The OECD - OCDE’s recent report (https://lnkd.in/e6YZHHHW) reinforces this reality: EMDE capital markets are underdeveloped - illiquid, shallow, and often over-reliant on a small number of institutional players or narrow product types. So, adding liquidity via secondaries, exit guarantees, or plug-and-play resale channels isn’t just a tactical tweak. It’s systemic. Liquidity transforms blended finance from static mega-transactions into capital that adapts, recycles, and scales. Without it, even well-structured blended deals risk becoming stranded assets, funds that can't respond to changing priorities, scale for impact, or reset when things go off-track. Lisa Sachs Perrine Toledano Tucker Wilke #blendedfinance #liquidity #impactinvesting #secondarymarkets #emergingmarkets #developmentfinance #systemschange

If you only watched the stock market tickers in #2025, you missed half the story. While IPOs captured headlines, a quieter shift played out across India’s private ecosystem. Secondary transactions in unlisted companies moved from being occasional to becoming a planned part of liquidity and exit strategies. Early investors, founders and employees increasingly took partial liquidity without forcing an IPO. At the same time, capital actively flowed into proven private businesses through structured secondary routes. The entry and expansion of dedicated secondary funds in India during 2025 underlines how institutional this market has become. Based on industry estimates and reported activity, total secondary transaction volume in India’s unlisted space is estimated at roughly $10Bn to $20Bn in 2025. Most of this activity remains private, but the scale is now hard to ignore. On pricing, most secondary deals were done at sensible discounts to the latest primary valuation, reflecting liquidity, timing, and a win-win for both buyers and sellers. Some of the largest and most active secondary stories of the year included: NSE India - Continued to be among the most actively traded unlisted assets, with strong institutional participation ahead of a potential listing. Lenskart.com - Pre-IPO secondary transactions that allowed early investors and ESOP holders to monetise partially. PhonePe - One of the biggest secondary-led liquidity events, driven largely by employee and early investor exits ahead of its IPO journey. Zepto - Large secondary sales and discussions alongside late-stage funding rounds to provide liquidity while reshaping long-term ownership. 2025 also saw companies like Pine Labs, Shadowfax, Urban Company, BlueStone, Meesho, Fractal, Kuku FM, BharatPe, Flipspaces, Porter (to name a few) where secondary components provided targeted liquidity rather than headline exits. Why this matters: - For LPs, DPI and real cash returns matter more than paper valuations. - For founders and employees, secondaries turn years of effort into real outcomes. - For late-stage investors, they offer access to proven companies with better risk reward ratio. As we enter #2026, the capacity to facilitate secondary liquidity remains a key differentiator for top-tier funds and late-stage startups. incentiv Tabulate Ranjit Sundaram Diganth Jagadish Indranil Tiwary #PrivateMarkets #SecondaryDeals #UnlistedShares #VentureCapital #PrivateEquity #IndiaStartups #Liquidity #Exits

In 2024, the VC secondary market was almost half the size of the VC primary market (i.e. VC funds deployed). If the trend holds, annual VC secondary activity will surpass primary activity within the next decade. Is this really a surprise? In 2024, public stock market secondary volume was 100X greater than primary volume. The last time you bought NVIDIA stock, you likely purchased it from another investor (indirectly), not from Nvidia itself. That’s the secondary market. As companies remain private longer, it's reasonable to assume more secondaries will occur. In the past month alone, Caplight's IPO Readiness Tracker flagged Deel conducting a $300 million secondary sale, and Anduril Industries, Revolut, and Cohere doing large tenders. How can the VC ecosystem best prepare for this market shift? LPs: 💧 LPs will have to gauge GPs not only on their ability to find gems but also on their capacity to liquidate them at the right time. ⌛ Liquidity risk will be a bigger consideration, and familiarity with continuation vehicles and LP-interest secondary transactions will be a useful skill set to develop. GPs: 🏃♂️ The #VentureDeals (Brad Feld) approach of allocating 10% of a VC’s time to exits and admin likely won’t cut it. Anecdotally, we’re starting to see the rise of the Chief Liquidity Officer role among the smartest VCs. 📊 VCs will need to develop portfolio management practices akin to those of public portfolio managers. Private companies: 🚰 Companies will have to rethink stock-based compensation management, moving from stock transfer restrictions to controlled liquidity as a tool to avoid talent leakage. ⚖️ Executives will need to balance primary raises with secondary permissiveness as they manage the capital needs of their companies. The good news? This won’t change overnight, and we’re here for you with the tools, analysis, and support you need to make the secondary market your competitive advantage. Sources are linked below. #vc #venturecapital #liquidity #alternativeinvestments #secondarymarket #IPO