How VC secondaries became the ‘release valve’ for startup liquidity pressures

Author: Kevin Dowd
Read time: 5 minutes
Published date: 1 December 2025

In recent years, the secondary market has become the primary place where many startups and their investors are able to fill the void created by an extended quiet period in the IPO market.

Today, the secondary market has become the primary place where many startups and their investors are able to access liquidity, filling the void created by an extended quiet period in the IPO market. In the 12 months from July 2024 through June 2025, total VC secondary transaction value reached an estimated $61.1 billion, surpassing the combined value of all VC-backed IPOs over the same period ($58.8 billion).

Top startups are staying private for much longer than they used to. Some companies that are able to meet their capital needs on the private market may forgo IPOs altogether. In this new-look market, VC secondaries have emerged as an increasingly critical tool.

Why VC secondaries are surging

The lengthening of the liquidity cycle has had a clear impact on the fund economics of active VC funds. LPs committed capital thinking the fund lifespan would be between 10 and 12 years. When that cycle is extended, liquidity is delayed. Jaskel says that some active VC funds may ultimately take 15 to 20 years to exit all of their portfolio positions and fully return capital to their LPs.

Many companies that are currently still private have long since established themselves as leaders in their respective spaces, such as SpaceX, Stripe, and OpenAI.

From the perspective of an investor like Jaskel, using secondaries as a way to invest in high-growth startups holds clear appeal. Secondaries can offer a welcome alternative for investors eager for liquidity and are sometimes seen as a way to mitigate the J-curve of returns commonly seen in private markets.

“It’s a really interesting way to access private markets in a much less volatile, shorter duration, and frankly more targeted manner,” says Ben Slome.

What VC secondaries look like

Venture secondaries are often highly bespoke transactions structured to fit the specific needs of a company or its investors. Traditionally, most venture secondaries were fund secondaries where one LP bought a stake in a GP-led venture fund from another LP. However, the market is changing, with an increase in direct secondaries, where an investor buys a secondary stake in a particular company.

These direct secondaries are typically structured either as a tender offer, or as a one-off transaction where a shareholder negotiates directly with a secondary buyer.

A nascent market

Different investors approach the secondary market in different ways. Some truths apply regardless of a fund’s specific approach. Venture capital as a whole is a private market where information and access to deals can be difficult to find. The venture secondary market tends to be even more opaque.

“Venture growth is still very new, in the sense that you are still seeing a lot of barriers to entry,” Jaskel says.

The market for buying direct secondary stakes in venture-backed startups is still emerging, with norms and structures still being defined. However, investor interest in the space continues to explode.

Why startups choose secondaries

The primary motivation for running a tender offer or approving other types of secondary transactions is to provide liquidity to early investors or employees. Companies might also have other reasons to support secondary transactions, such as employee retention or adjusting financial structure.

Recent interest in venture secondaries is connected to the relative dearth of IPOs in recent years. Most venture-backed companies see secondaries as just another step in the long journey toward an eventual exit, utilized as a retention lever on the pathway to a more substantive liquidity event.