Secondaries Explained

Market view

Secondary market trends & forecast

The secondary market has grown from a niche corner of private investing into a structural feature of how private companies and funds operate. These are the forces driving that growth, and where the market is likely headed next.

LongerMedian time from founding to IPO for US venture-backed companies has stretched well past a decade for many top-tier names
RecordGP-led continuation fund volume has repeatedly set new annual highs across recent years
WideningThe gap between private "unicorn" count and annual venture-backed IPO count remains historically wide
Secondary shares usually price below the last primary roundA bar chart comparing two prices. The last primary round prices at 100 dollars per share. The secondary price is lower, at 75 dollars. An arrow points to the reasons for the gap: illiquidity, an information gap between buyer and seller, and a weaker share class that typically carries no liquidation preference and no information rights.WHY A SECONDARY USUALLY PRICES BELOW THE LAST ROUND$100Last round$75Secondary priceIlliquidity, information gap,weaker share class, nopreference or information rights
Secondary shares usually price below the last primary round
01

GP-led continuation vehicles keep taking share

Continuation funds have gone from a niche, sometimes-stigmatized structure to a mainstream tool that large managers use routinely to hold onto winning positions past a fund's natural life. Expect this to keep growing as more funds raised in the 2018–2021 vintage boom approach their wind-down dates while still holding strong private companies.

02

The IPO backlog keeps building pressure on private-market liquidity

A multi-year stretch of fewer venture-backed IPOs than the 2020–2021 peak has left a large stock of highly valued, still-private "unicorns" with no near-term listing path. That backlog is the single biggest structural driver of secondary market growth — it's not that more people want to sell, it's that the traditional exit valve has narrowed.

03

Structured and recurring tender programs are becoming standard practice

The largest, most in-demand private companies increasingly treat tender offers as a scheduled program, not a one-off favor — see the SpaceX and Stripe case studies. As this becomes normalized among top-tier companies, mid-sized private companies are adopting similar (if smaller and less frequent) programs to stay competitive on retention.

04

AI-sector valuations are creating a new, fast-moving secondary segment

Rapid, large primary rounds at AI-focused companies have produced a cohort of employees and early investors sitting on fast-appreciating but completely illiquid equity, often within a year or two of joining. Expect secondary activity in this segment to grow quickly, alongside more scrutiny of how buyers price positions in companies whose valuations are moving unusually fast.

05

Marketplaces and platforms are professionalizing price discovery

Specialist secondary marketplaces are publishing more indicative pricing data, deal volume, and discount benchmarks than they did five years ago. That's narrowing (not eliminating) the information gap between buyers and sellers, which should gradually compress the bid-ask spread on the most liquid, well-known private names.

06

Non-US markets are catching up on regulatory infrastructure

Regulators in markets including India, Taiwan, and parts of the Gulf have moved to formalize rules for unlisted and pre-IPO share trading, following a path the US and UK secondary markets took years earlier. As that infrastructure matures, expect secondary volume growth to increasingly come from outside North America.

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