Data sourced from Dakota Marketplace, the global LP and GP intelligence platform trusted by thousands of investment professionals. Learn More | Book a Demo
The Shift
The US venture secondary market crossed $100 billion in annual transaction value in 2025, a scale that brings secondaries closer to matching traditional IPO and M&A exit volume combined. At the same time, 43% of allocators now invest in GP stakes funds, according to McKinsey's LP survey, moving what was once a niche institutional strategy into the mainstream. Both trends point to the same underlying shift: capital is increasingly finding its way into private markets through structures that sit outside a traditional fund investment, whether that's buying into an existing portfolio company's shares or buying into the management company itself. This piece covers what's driving each strategy and what fund managers need to know to access this capital.
The Data
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Metric
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Figure
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Source
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US VC secondary transaction value (2025)
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$100B+
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Dakota, "The Growing Popularity of VC Secondaries," March 2026
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Allocators currently invested in GP stakes
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43%
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McKinsey LP survey, cited in Dakota, July 2026
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GP stakes M&A transaction volume growth (2025)
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+40%
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Campbell Lutyens, cited in Dakota, July 2026
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Blue Owl GP Stakes Fund III net MoIC / net IRR
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3.00x / 21.6%
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Blue Owl Capital investor materials, cited in Dakota, July 2026
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Estimated addressable GP stakes targets
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2,500+
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Wafra internal research, cited on Dakota's podcast, Episode 89
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Buyout manager penetration of that target universe
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~9%
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Gustavo Cardenas, Managing Director, Wafra, Dakota podcast Episode 89
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Credit manager penetration of that target universe
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~15%
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Gustavo Cardenas, Managing Director, Wafra, Dakota podcast Episode 89
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The secondary market's growth is concentrated. Trading activity remains heavy among a small group of elite venture names, and pricing has shifted meaningfully: after more than two years of discounts following the 2022 correction, secondary trades have begun settling at or above NAV for the first time since that peak.
The 40% jump in GP stakes M&A volume in 2025 was similarly uneven. Campbell Lutyens reports the center of activity has shifted toward middle-market managers running $2 billion to $10 billion in AUM, a cohort facing a tougher fundraising environment than the household names that anchored the category's earliest deals, and with more to gain from a strategic minority partner.
1. Secondaries: The Market's Pressure Valve
Venture capital has always demanded patience, but as exit timelines stretch and IPO windows stay narrow, secondaries have become the venture market's primary release valve for liquidity. Direct, single-asset secondaries are now the fastest-growing format by volume, having overtaken traditional LP interest sales as the market's center of gravity. High-profile tender offers from companies like Stripe, Canva, and Databricks have brought this format into the mainstream.
Why the surge:
- Companies are staying private significantly longer than historical norms, and investors from earlier vintage funds are increasingly motivated sellers as distributions remain sparse.
- The IPO market has not absorbed the backlog of venture-backed companies at the pace required to satisfy allocator return expectations.
- Enthusiasm around generative AI has driven meaningful appreciation in a subset of late-stage companies, creating motivated sellers locking in gains and motivated buyers seeking exposure ahead of exits.
- Dry powder dedicated to VC secondaries has grown substantially, and established venture firms have begun participating directly as buyers.
For fund managers, the structural takeaway is that secondaries are no longer a distress signal. Institutional adoption of secondaries as a portfolio management tool, rather than a last-resort liquidity option, is accelerating across the market, and GP-led continuation vehicles now let managers retain high-conviction assets beyond a fund's traditional lifespan.
2. GP Stakes: Owning the Fee Stream, Not the Fund
A GP stakes investor doesn't own portfolio companies. It owns a minority equity interest, typically 10% to 30%, in the management company itself, earning a pro-rata share of management fees, carried interest, and balance sheet co-investment income. That structure produces a fundamentally different return profile than traditional private equity: management fees begin flowing almost immediately, largely eliminating the J-curve that defines a typical PE fund's early years.
Gustavo Cardenas, Managing Director at Wafra, one of the earliest entrants into the strategy, framed the opportunity directly on Dakota's podcast: he compares today's GP stakes market to "where secondaries were in the '90s," arguing there's still substantial upside left in the total addressable market even as more capital enters the space. Wafra's own research identified at least 2,500 potential GP stakes targets, with buyout managers at roughly 9% penetration and credit managers at the highest penetration level, around 15%, meaning most of the addressable market hasn't transacted yet.
Why the surge:
- Management fees are contractual, not mark-to-market, giving GP stakes structurally lower correlation to public markets than traditional private equity.
- As a manager raises successively larger funds, the management fee base grows with it. A firm managing $5 billion today that grows to $15 billion within a decade has tripled its fee revenue without any change in fee rate.
- Liquidity in the space is more available than commonly assumed. Cardenas notes that across Wafra's 20 to 30 GP stakes investments, more than 10 have resulted in full realizations, partial realizations, or follow-on transactions with other GP stakes players.
- For fund managers, GP stakes capital funds succession commitments, platform expansion, and founder liquidity without diluting existing allocators or ceding operational control, since governance in these deals is typically passive and non-voting.
Typical deal terms: a 10% to 30% minority stake, priced at 10 to 15x management company EBITDA for established managers, with governance rights limited to board observer status.
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What Allocators and GP Stakes Investors Look For
Ticket sizes: In GP stakes, Wafra's "catalytic capital" commitments for emerging managers typically run $100 million to $200 million per transaction, according to Cardenas.
What makes allocators say yes: For GP stakes specifically, Cardenas points to two must-haves beyond a strong track record: a manager who thinks like an "investor entrepreneur," building the firm as a business rather than focusing solely on deal execution, and a clear answer to why the market needs another firm in that specific strategy. "If you can't answer that," he says, "we probably won't have a next meeting."
How to Access This Capital
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For GP stakes, middle-market managers running $2 billion to $10 billion in AUM are currently the center of deal activity. Firms below $1 billion in AUM face a materially harder capital-raising environment and may benefit most from a strategic minority partner's distribution network.
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Be prepared to articulate firm-level differentiation, not just fund-level track record. GP stakes investors are underwriting the business, not just the portfolio.
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For managers considering a continuation vehicle, treat it as a tool to retain high-conviction assets beyond a fund's traditional life, not solely as a liquidity mechanism for existing allocators.
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Expect a multi-meeting relationship-building process for GP stakes rather than a single pitch. Cardenas describes involving other team members and senior leadership before committing, since Wafra evaluates managers as long-term partners across fund 2, fund 3, and beyond.
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Understand that GP stakes governance is typically passive. Managers retain operational control while gaining a partner with institutional distribution relationships.
Know Where The Capital Is Going Before Your Competitors Do
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