The VC secondary market has crossed $100B in annual transaction value. Here's what investors need to know.
Venture capital has always demanded patience. But as exit timelines stretch and IPO windows stay narrow, a parallel market has quietly scaled into one of the most consequential corners of private markets, and it's no longer operating in the background.
US venture secondary transaction value surpassed $100 billion in 2025, a threshold that brings secondaries closer than ever to the scale of traditional IPOs and M&A combined. That milestone would have been unthinkable a decade ago.
The structural case is clear. Thousands of VC-backed companies are awaiting exits, many having raised follow-on rounds well into the post-COVID correction. With the IPO market functioning at a fraction of its historical pace and M&A absorbing the bulk of venture-backed exits, secondaries have become the market's primary pressure valve.
Market Sizing
The US VC direct secondary market has grown steadily, driven largely by ballooning valuations among top-tier unicorns. Trading activity remains heavily concentrated in a small group of elite names, and for investors outside that cohort, liquidity remains constrained and pricing opacity remains a defining feature of the market.
Pricing dynamics have shifted meaningfully in recent quarters. After more than two years of sustained discounts following the 2022 correction, secondary trades have begun settling at or above NAV for the first time since the peak. The bid-ask spread compression that began in late 2023 appears to be holding.
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Transaction Types: A Taxonomy
Direct / Single-Asset Secondaries The fastest-growing format by volume. A buyer acquires shares directly from an individual seller, whether a founder, early employee, or existing investor, in a specific company. High-profile tender offers from names like Stripe, Canva, and Databricks have brought this format into the mainstream. Direct secondaries now dominate overall venture secondary activity, having overtaken LP interest sales as the market's center of gravity.
LP Interest Sales One LP transfers their interest in a venture fund to a secondary buyer. The acquirer inherits remaining capital commitments alongside exposure to the fund's underlying portfolio. Historically the dominant structure, LP sales have increasingly been supplemented, and in some segments supplanted, by more surgical, single-asset transactions.
GP-Led / Continuation Vehicles A general partner moves a high-conviction portfolio company into a new vehicle, offering existing LPs the option to exit while new capital enters at a negotiated price. The structure has surged in recent years, with a number of high-profile continuation funds announced by top-tier GPs. GP-led deals allow fund managers to retain their best assets beyond the traditional fund lifecycle, an increasingly attractive proposition as hold periods lengthen.
Tender Offers Company-organized or third-party-led offers to purchase shares from a broad pool of shareholders, typically employees and former employees, at a fixed price within a defined window. Leading startups increasingly treat periodic tender offers as a retention and cap table management tool, not merely a liquidity event.
Structured / Bespoke Secondaries Purpose-built transactions that address a seller's specific financial circumstances, including option exercise timing, concentrated equity positions, or tax optimization. These deals require sophisticated structuring and are most commonly seen among founders and senior executives at late-stage, well-capitalized companies.
Key Market Participants
The secondary ecosystem spans a range of mandates and check sizes.
Large-Scale Institutional Programs. Firms like Lexington Partners, Coller Capital, HarbourVest Partners, and StepStone operate diversified secondary strategies across PE and VC. Their scale gives them the ability to acquire LP portfolios and lead complex GP-led transactions.
Dedicated Venture Secondary Specialists. Industry Ventures remains among the most active participants in the space. Forge and Destiny XYZ operate in the direct secondary market with a focus on marketplace infrastructure and price discovery.
Structured Liquidity Providers. A newer category of specialist firms has emerged to serve founders, executives, and key shareholders who need bespoke solutions rather than standard share transfers. Interlude Capital is one such firm, bringing over 25 years of combined experience to structured secondary transactions across venture-backed technology companies in the US.
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What's Driving Sustained Growth
Several structural forces have converged to keep secondary volume elevated.
Prolonged private hold periods. Companies are staying private significantly longer than historical norms. Investors from earlier vintage funds are increasingly motivated sellers as distributions remain sparse and exit timelines extend.
IPO market inactivity. Despite selective reopening, the public markets have not absorbed the backlog of VC-backed companies at the pace required to satisfy LP return expectations.
AI-driven valuation premiums. Enthusiasm around generative AI has driven significant appreciation in a subset of late-stage companies, creating both motivated sellers locking in gains and motivated buyers seeking exposure ahead of exits.
Expanding buyer base. Dry powder dedicated to VC secondaries has grown substantially. Established venture firms have begun participating directly as buyers, and evergreen fund structures are bringing a broader class of capital to the market.
Institutional normalization. Tender offers are becoming standard practice among leading startups, and institutional adoption of secondaries as a portfolio management tool, rather than a distress indicator, is accelerating across the market.
Looking Ahead
2026 is shaping up to be a pivotal year, as venture secondaries evolve from a temporary liquidity solution into core market infrastructure. The caveat worth watching is concentration risk. If anticipated IPOs from megacap private companies like SpaceX and OpenAI materialize, secondary trading in those names will shift meaningfully, given how much of overall volume they represent.
The firms best positioned for what comes next are those with the sophistication to price and structure transactions across the full complexity of the market, from large institutional portfolio transfers to a single founder navigating an expiring option grant.
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