When startup employees signed on for equity compensation a decade ago, the implicit deal was straightforward: accept lower cash pay in exchange for stock options that would become valuable if and when the company went public. But with the median time from founding to IPO stretching beyond a decade, and many successful companies choosing to stay private indefinitely, that bargain has fundamentally changed. The rise of secondary markets is both response and accelerant to this new reality.
Secondary markets—platforms where employees, early investors, and other shareholders can sell stakes in private companies to interested buyers—have grown from a niche corner of finance to a substantial industry. Estimates suggest that secondary transactions exceeded $100 billion in 2025, up from roughly $20 billion just five years earlier. For context, that's larger than the total amount raised by U.S. venture-backed companies in many recent years.
The drivers are structural. Employees who joined promising startups in their twenties are now in their thirties and forties, facing major life expenses—mortgages, children's education, aging parents—while sitting on paper wealth they can't access. Meanwhile, institutional investors increasingly view private company secondaries as an attractive asset class, offering exposure to high-growth companies without the premium valuations that often accompany primary fundraising rounds.
The mechanics have become more sophisticated. Platforms like Forge, EquityZen, and Carta Cross provide standardized processes for matching buyers and sellers, handling compliance, and executing transactions. Company-sponsored tender offers have become routine at growth-stage companies, allowing approved buyers to purchase shares directly from employees at predetermined prices. Some companies have even implemented ongoing liquidity programs that give employees regular windows to sell portions of their holdings.
For employees, the calculus has shifted. Holding all your eggs in one basket—particularly one basket you can't easily diversify from—represents concentrated risk that financial advisors universally counsel against. Selling a portion of secondary shares allows employees to lock in gains, diversify portfolios, and fund life expenses without leaving their companies or waiting for an exit that may be years away. The psychological benefit of having some actual money in the bank, rather than entirely theoretical wealth, shouldn't be underestimated either.
Companies are navigating complex tradeoffs. On one hand, secondary liquidity helps attract and retain talent—it's increasingly difficult to recruit senior employees with purely illiquid compensation. On the other hand, secondary transactions create external shareholders with different incentives than employees, complicate cap tables, and can establish price points that create awkward comparisons with primary valuation rounds. Some companies tightly restrict secondaries; others embrace them as part of their talent strategy.
Investors face their own decisions. Secondary purchases often come at discounts to the most recent primary round, but those discounts have compressed as demand has increased. Buyers must also navigate information asymmetry—unlike primary investors, secondary buyers typically don't receive detailed financials, board seats, or governance rights. Due diligence relies heavily on public information, employee networks, and third-party research.
The broader implication is that the line between public and private markets continues to blur. Companies can now access many of the liquidity benefits of being public—capital raising, employee compensation, investor liquidity—while avoiding the regulatory burdens, scrutiny, and governance requirements of public markets. For better or worse, this represents a fundamental shift in how high-growth companies are financed and how the wealth they create is distributed.