Discount / premium

Worked example

A worked example of how discount size varies by demand (illustrative figures):

1. Company A last raised at $25/share. It's a well-covered, in-demand name with several marketplaces and funds actively bidding — secondary trades clear around $24/share, just a 4% discount, because buyer competition for the name is high.
2. Company B also last raised at $25/share, but its last round was over two years ago, its growth has slowed, and information is scarce. Secondary trades for Company B clear around $17.50/share — a 30% discount — because buyers are pricing in staleness risk and thin information.
3. The same "last round price" tells you almost nothing about what a share is actually worth today; the discount is where the real information about market sentiment toward a specific company lives.
4. A handful of the most in-demand pre-IPO names occasionally trade at a premium to the last round — buyers bidding up scarce available supply in a name they expect to re-rate higher at its next round or IPO.