The Second Door

For years, the venture exit had two doors: an IPO or an acquisition. Both are still open, but not wide enough to return the cash investors need. So more and more liquidity is moving through a third route: the secondary market. Here’s how that door works, who’s standing behind it, and why getting through it on good terms depends on who you know.

What a Secondary Actually Is

A secondary is a sale of something that already exists: a limited partner’s stake in a venture fund, a founder’s or early investor’s shares in a company, or a portfolio of holdings moved into a new vehicle. No new money goes into the company. Ownership simply changes hands.

There are two broad types:

  • LP-led: a fund investor sells its stake in a fund to a new buyer.
  • GP-led: the fund manager organizes the sale, often by moving one or more companies into a continuation fund so existing investors can cash out or roll over.

A Note on the Numbers

Most of the figures below come from one trade newsletter, The Secondary Brief, which reports on primary research from William Blair, Lazard, PitchBook and MSCI. We haven’t checked those primary reports directly, so each figure is credited to its original source and to the newsletter. Several of these figures cover the whole secondary market, which is mostly buyout, so they shouldn’t be read as venture numbers. And there’s no reliable data on secondaries for seed-stage stakes, so nothing here should be read as describing that market.

The Venture Piece Is Growing Fast

The cleanest venture-specific figure comes from UBS, cited by Wellington Management: “GP-led VC/growth secondary transaction volume reached about US$12 billion in 2025, an increase of more than 40% year over year.”

The Wider Market Is Getting Bigger, with Fewer, Larger Deals

Across the whole secondary market (private equity and venture together):

  • Volume. William Blair raised its 2026 forecast to $252B, from $250B in March: $123B LP-led and $129B GP-led, against $220B in 2025. Other houses forecast $250B–$275B. (William Blair Q3 newsletter, Oct 7, via The Secondary Brief.)
  • Pricing confidence. In William Blair’s survey, 94% of buyers expect LP-led pricing to hold.
  • Fewer continuation deals. PitchBook counted 95 continuation-fund deals worth $47.4B in the 12 months to Sept 30, 2026, against 161 deals worth $97.6B in 2025. These are mostly buyout deals. (Via The Secondary Brief.)

For context, the normal route for returning cash is still slow. MSCI reports private equity funds paid out 9% of their value in H1 2026, “roughly a third of the historical norm” (via The Secondary Brief). That’s a private-equity-wide figure, not a venture one, but it helps explain why sellers keep looking for another door.

The Buyers Are Changing

New buyers are arriving, many of them funded by wealthy individuals rather than institutions:

  • About 40% of secondary investors now run an evergreen vehicle, up from 34% at end-2025 (Lazard interim report, via The Secondary Brief).
  • Adams Street, a Chicago firm with $76B in assets that has invested in venture funds since 1972, launched an evergreen fund investing “primarily through venture capital secondaries and growth co-investments,” with $363.5M from anchor investors. It opens to qualified clients on December 1 (via The Secondary Brief, citing Alternatives Watch). Adams Street also closed its eighth secondaries fund at $2.7B in August.

The Buyers Are Also Choosy

More buyers doesn’t mean easy deals.

  • Software is harder. William Blair says software-heavy portfolios have been “harder to execute.” Across single-asset continuation deals (mostly buyout), Lazard reports technology’s share of volume fell from 27% in 2025 to 20% in H1 2026, while healthcare rose from 12% to 17%.
  • Discounts can be steep. Primavera is reportedly seeking about $1B for a continuation vehicle holding ByteDance and Ant stakes, with ADIA and Coller reportedly “in talks at 30% below the mark” (The Secondary Brief, citing Bloomberg and Secondaries Investor). The deal hasn’t closed, and these are giant late-stage companies, but it shows how much price depends on who’s at the table.

Why Relationships Decide the Terms

Secondary deals are private, negotiated and hungry for information. Buyers decide which stakes to bid on based on whom they trust to give them real data. Sellers usually get better terms when several credible buyers compete instead of one.

Wellington puts it simply: in this market, “networks, relationships, and reputation” are a competitive advantage. If you’re a seller, or a founder whose investors are selling, the same is true for you.

What Founders Can Do Now

  1. Read your documents. Check ROFR and transfer provisions with counsel. Secondary buyers can end up on your cap table.
  2. Talk to early investors about liquidity early. A planned tender alongside a new round can tidy up your cap table on your terms.
  3. Know who’s buying. Learn the names of the funds active in your sector.
  4. Make your metrics easy to underwrite. If buyers find software harder to price, clear, durable numbers help.

What GPs Can Do Now

  1. Build buyer relationships before you need them. Know two or three dedicated secondary buyers now.
  2. Run a real process. Reach several credible buyers, not one.
  3. Model the discount honestly. Share realistic pricing with your LPs before you sell.
  4. Model, test, adjust. Start with a small, selective sale, learn how buyers respond, then decide on the next step.

The Introduction Is Part of the Price

The exit hasn’t disappeared. It moved to a door that only opens through relationships. Much of that map is public: Form D filings list related persons, Form ADV shows advisers and their funds, and fund portfolios and board seats show who’s connected to whom. ConnectLab.live maps those paths alongside your own contacts, so you can see who in your network already knows the buyers.

Connection is the currency of the 21st Century.

Which two secondary buyers could you name today, and who in your network could introduce you to them?

If you’d like help with that, here’s an open invitation:

Sources

About Ken McArthur

Ken McArthur is the founder of ConnectLab.live, an AI relationship-intelligence and warm-intro platform that helps founders who are raising find the funds that fit and the people who can introduce them, and helps fund managers connect with the founders they back. He was recently accepted into Harvard Business School Foundry. He also writes Raise Smarter, a daily newsletter on what's really moving in early-stage fundraising. Ken challenges us to realize we ALL have an impact, whether we want to or not, on thousands of people we touch in our day-to-day lives, and he shows that simple things make a HUGE difference. ConnectLab.live grew out of that belief. Connection is the currency of the 21st Century, and the right introduction can change a company's future. Long before ConnectLab, Ken was the popular host of live events that brought together top-level marketers, entrepreneurs, business owners, corporations and non-profit organizations to build multi-million dollar joint venture relationships. He has managed product launches ranked in the top 400 sites on the Internet and is regularly asked to speak at leading marketing events. He created AffiliateShowcase.com, a pioneering affiliate program search engine and directory. He also founded the MBS Internet Research Center, which conducted the world's largest survey ever attempted on creating and launching successful information products. Ken was the official mentor for Sterling Valentine as he took his launch from zero to over $100,000 in less than 8 days, a proof of concept documented in Info Product Blueprint. Today he puts that same skill for connecting people and launching ideas to work for founders and the investors who back them.

Leave a comment