Why the Direct Secondary Market Exists
The secondary market is now the primary liquidity mechanism for private company shareholders. It reached $240 billion in 2025 — nearly ten times its size a decade ago.
The secondary market for private company shares is large and growing rapidly. It reached $225–240 billion in total transaction volume in 2025 — nearly ten times its size a decade ago. But the term "secondary market" obscures three very different types of transactions.
The first is LP interest transfers — an investor in a fund sells its entire position to a secondary buyer. This totaled approximately $121 billion in 2025.
The second is GP-led continuation vehicles — a fund manager creates a new vehicle to hold assets from a maturing fund, giving existing investors the option to roll over or cash out. This segment reached $93–115 billion in 2025.
The third — and the most interesting — is direct secondaries. A buyer acquires shares in a specific private company directly from existing shareholders: employees, founders, and early-stage investors.
How large is the direct secondary market?
PitchBook estimates the US venture capital direct secondary market at $48–72 billion as of mid-2025, with direct stakes jumping 31.4% from the prior quarter. In the twelve months through June 2025, total VC secondary transaction value reached $61.1 billion — surpassing the combined value of all VC-backed IPOs over the same period.
An estimated 71% of all VC exit dollars in 2024 came from secondary sales, not IPOs or M&A. The secondary market is now the primary liquidity mechanism for private company shareholders.
Why this market exists — and why it is growing
Companies are staying private far longer than historical norms. The median age of a company at IPO has risen from four years in 1999 to 10.7 years in 2025.
The simple arithmetic reveals the problem. There are now more than 1,600 unicorns globally — up from roughly 500 in 2020 — but only about 30 venture-backed technology companies go public in any given year. At current exit rates, it would take decades to clear the backlog.
This creates acute pressure for shareholders. Employees who received equity grants five to ten years ago have significant paper wealth but no cash. Vesting schedules, 409A valuations, and tax events create urgency to sell. Companies increasingly recognize that offering secondary liquidity is a retention and recruiting tool.
These are structural forces, not cyclical ones. The regulatory environment, the abundance of private capital, and founder preferences for staying private are not reversing. The secondary market is the release valve.
The infrastructure is catching up
A decade ago, selling shares in a private company required knowing someone who knew someone. Today, a dedicated infrastructure has emerged.
Forge Global — acquired by Charles Schwab for $660 million — operates the largest marketplace for private company shares, with over 636,000 registered users. Trading volume increased 73% year-over-year from 2023 to 2024.
Hiive has emerged as a major force, processing over $100 million monthly with more than $5 billion in live securities orders. Hiive has facilitated trades for over 71% of U.S. decacorns.
Nasdaq Private Market facilitates company-directed liquidity programs — tender offer transactions doubled to $6 billion in 2024.
At the institutional end, Goldman Sachs acquired Industry Ventures for up to $965 million. EQT acquired a major secondaries platform for $3.7 billion. Franklin Templeton acquired Lexington Partners for $1.75 billion. The standalone secondaries firm may become the exception rather than the norm within five years.
Pricing and the opportunity
The headline data shows the direct secondary market tightening — the median discount to last-round valuation narrowed from 46% in December 2023 to just 3% by December 2024.
But this masks a bifurcated market. The highest-profile private secondaries — SpaceX at $800 billion, OpenAI at $500 billion, Stripe at $140 billion — trade at 30–50x revenue in an environment where pricing is efficient and discounts are minimal.
The opportunity lies elsewhere: in the hundreds of companies in the $1–20 billion valuation range where secondary markets are thin, pricing is less efficient, and access requires direct relationships with shareholders. The direct secondary market is not a broad, liquid marketplace. It is a series of micro-markets around individual companies — and in the less-trafficked corners of those micro-markets, informed buyers with direct sourcing relationships can acquire shares at valuations that offer compelling risk-adjusted returns.
The asset class works
Secondary funds have delivered a 21.4% IRR over a three-year horizon. Over trailing ten-year periods, private equity secondaries have outperformed global public equities in every instance between 2005 and 2024 — every single one.
Secondary buyers benefit from a mitigated J-curve, faster distributions, and lower return dispersion than primary fund investors. The broader secondary market has grown at a 20% compound annual growth rate since 2013 and is projected to more than double by 2030.
Most private company shareholders still have no practical access to secondary liquidity. The direct secondary segment remains the least institutionalized and most relationship-intensive part of the fastest-growing market in private capital.