Welcome back to The Cap Table Newsletter! This bi-weekly newsletter shares key insights on angel investing, start-ups, and investment opportunities.
This week, we’re talking about secondaries.
The market quietly made them one of the most interesting parts of venture right now.
For years, secondaries were a niche strategy. Something only large funds, family offices, or insiders paid attention to.
That’s changed.
Let’s talk about why.
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Here’s the shift.
For most of the last decade, venture liquidity followed a predictable pattern.
Companies raised frequently. Valuations stepped up every round. Employees assumed an exit was always 7–10 years away. Maybe even sooner.
Waiting felt rational.
That environment no longer exists.
Companies are staying private longer. Exit windows have stretched. Fundraising cycles are slower and more selective.
Paper gains stopped feeling real.
And when paper gains stop feeling real, pressure builds across the cap table.
What the Numbers Show
The rise in secondaries isn’t theoretical. It’s showing up clearly in the data.
The median time to IPO has pushed past 10 years, nearly double what it was a decade ago
Tender offers and employee liquidity programs are up meaningfully year over year
The private market secondary ecosystem now moves well over $100B annually across LP stakes, GP-led deals, and direct secondaries
Liquidity demand has increased even as primary fundraising has slowed
Where Secondary Supply is Coming From.
On the sell side, secondaries are being driven by very practical motivations.
You’re seeing:
Employees who have now been private for seven to ten years looking for partial liquidity
Early angels who want DPI instead of indefinite markups
Funds managing vintage risk and portfolio concentration
Founders are trying to relieve internal pressure without forcing an exit
In most cases, these sellers are not bearish.
They still believe in the company. They just want optionality.
That distinction matters more than people realize.
Why Demand Rose at the Same Time.
Buyer behavior has shifted.
Many investors are no longer optimizing purely for upside. They’re optimizing for risk-adjusted outcomes.
Secondaries offer something that’s harder to find right now:
Access to high-quality companies that are otherwise closed
Businesses with real products, customers, and revenue
More operating data than early-stage primaries
Less binary risk than seed investing
Potentially shorter timelines to liquidity
Instead of underwriting whether something can be built, investors are underwriting how it compounds from here.
That’s a fundamentally different bet.
The Access Advantage
Secondaries often provide exposure to companies investors simply cannot access directly through primary rounds.
This includes names like SpaceX, Anduril, and Perplexity.
When these companies raise, allocations are tight, insider-driven, and rarely open to new investors.
Secondaries become the only realistic path in.
That access premium is a major driver of demand, especially as category-defining companies stay private longer.
Why Secondaries Feel Different than Primaries.
Primary investing is about potential. Secondaries are about reality.
In a secondary transaction:
The product already exists
Customers already exist
Unit economics are often visible
Market positioning is clearer
Execution risk is lower than true early-stage
You’re not competing to get into a hot round. You’re evaluating whether the price and structure make sense today.
That shift in mindset is why more angels and LPs are paying attention.
The Timing Advantage
In slower markets, secondary pricing often adjusts faster than primary valuations.
Sellers are optimizing for liquidity. They’re not trying to maximize a headline valuation.
That can create opportunities to buy ownership at prices that reflect today’s market, not the last cycle’s peak.
For disciplined investors, this is where secondaries can quietly outperform.
The Reality Check.
None of this makes secondaries risk-free.
Late-stage does not mean safe. Private does not mean liquid. And structure matters more than most people expect.
Secondaries can be attractive precisely because the market is constrained.
But constraint cuts both ways.
Opportunity without understanding structure is not an edge.
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My Take
Secondaries aren’t a shortcut.
They’re a response to how venture has evolved.
As companies stay private longer and liquidity stretches out, capital is being forced to get more creative, more disciplined, and more honest about timelines.
Secondaries can be a powerful complement to early-stage investing when they’re priced correctly, structured cleanly, and understood for what they are.
They can also disappoint investors who mistake “later” for “safer.”
Knowing the difference is what matters.
In the next edition, I’ll break down:
Until next week, Elana ✌️
Resources
If you enjoyed this week’s newsletter - feel free to check out some of our past articles:
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