The Rise of VC Secondaries: Why Liquidity Is Redefining Venture Capital in 2025

Based on Ruben Dominguez Ibar’s “Why The VC Secondary Market Is Booming in 2025”.

A New Era for Venture Capital

The venture capital industry in 2025 looks dramatically different than it did just a few years ago. IPO markets are quiet, acquisitions are sluggish, and while funds are sitting on record amounts of committed capital, cash distributions to limited partners (LPs) have slowed to a crawl. The result is a liquidity crunch that has left investors and founders searching for alternatives. In this new environment, secondaries that allow existing investors to buy and sell private company stakes or fund positions have moved from the sidelines to the centre stage. Once considered a niche tool, secondaries are now becoming the backbone of how liquidity flows through modern venture capital.

The VC Liquidity Crunch

Venture capital has always been a long game. Investors write cheques today with the expectation of returns 8-12 years later, typically through IPOs or acquisitions. But in 2025 those traditional exit routes are nearly frozen.

1. IPOs & acquisitions have slowed dramatically in 2025.
2. Funds raised a record $3.1T globally, but distributions (DPI) are lagging well below expectations.
3. LPs want cash, not just paper returns. Founders and employees are also seeking partial liquidity after a decade-plus of waiting.
4. This gridlock has forced ventures to rethink exits.

For LPs like pension funds, endowments and sovereign wealth funds, this is a problem because they rely on cash distributions and not just paper gains to meet their obligations. Meanwhile, founders who have spent over a decade building companies are eager for partial liquidity to buy homes, diversify risk, or simply enjoy the fruits of their labour. This gridlock has forced the industry to rethink what an “exit” looks like.

Secondaries Step In

Secondary transactions have emerged as the pressure valve for venture capital’s liquidity problem. By allowing existing stakes in startups or funds to be bought and sold, secondaries provide liquidity without requiring an IPO or acquisition. Often supported by secure virtual data rooms that allow due diligence to be shared safely.

Three main flavours:

1. LP-led: Limited partners sell their fund positions to other investors to rebalance portfolios or free up capital for new commitments.
2. Direct: Founders or angel investors sell shares in a private company to gain partial liquidity.
3. GP-led continuation funds: General partners create new vehicles to hold their strongest portfolio companies, giving LPs the option to cash out or roll forward.

What once looked like creative deal-making is now standard practice. Secondaries are no longer a last resort but have become core tools for liquidity management across the venture ecosystem.

By numbers: A Market Surging

The secondary market’s rapid growth tells the story:

1. $152B in secondary volume in 2024 (+39% YoY)
2. VC secondaries now make up nearly 30% of venture deal activity, up from 16% in 2020.
3. Discounts narrowing (closer to 75-90% of NAV vs ~60% two years ago).
4. Big players like BlackRock, StepStone, and Coller are committing multi-billion-dollar funds.

This momentum reflects a market maturing quickly. Investors increasingly view secondaries not as distressed sales but as strategic tools.

What’s Changing: Continuation Funds & Retail Capital

1. Continuation vehicles are the breakout trend, especially single-asset deals that allow GPs to keep “trophy” companies while still offering LPs liquidity.
2. Retail investors & evergreen funds often pay closer to NAV, creating more competitive pricing and reshaping dynamics that were once purely institutional. While their document workflows are being enhanced by page-by-page document tracking, helping LPs and GPs monitor engagement with sensitive materials.

This democratisation of secondaries means venture liquidity is no longer confined to endowments and mega funds; it’s broadening a wide pool of participants.

The New VC Playbook: Liquidity as Strategy

Perhaps the most important shift is that liquidity planning is no longer reactive. Secondaries are being designed into the venture playbook from the very beginning.

1. For GPs: Continuation funds and structured secondary rights are now part of fund design. They allow managers to extend timelines, retain top assets and deliver options to LPs.
2. For LPs: Liquidity options are increasingly expected. Before committing to a new fund, LPs ask how the manager plans to provide interim liquidity.
3. For Founders: Structured secondary programmes are viewed as talent retention tools, offering team members partial liquidity while avoiding messy cap table issues.

Of course risks remain. Valuations in secondaries can be opaque, governance conflicts can arise when GPs sell assets to themselves, and regulators are scrutinising these transactions more closely. But despite these challenges, secondaries are no longer a secondary market, but they are becoming the infrastructure that supports the venture ecosystem merely because they use mechanisms like forwarding protection that help avoid unintended exposure.

The Future of Venture Liquidity

Venture capital is no longer about picking startups and waiting patiently for an IPO decades later; in 2025 it’s about actively managing liquidity along the way.

The big questions moving forward:

1. Will continuation funds overtake IPOs as the primary path to liquidity?
2. How will increased retail participation reshape pricing and access?
3. What role will regulators play as secondaries scale?
4. Could secondaries help stabilize venture markets through future downturns?

If you’re raising, investing, or managing a fund today, planning for secondaries isn’t optional; it’s survival.

This rise of the VC secondaries represents more than a market trend. It’s a fundamental shift in how venture capital works. By transforming liquidity from an afterthought into a strategy, secondaries are redefining the VC industry in 2025 and beyond.

For anyone raising, investing or managing capital today, understanding secondaries is no longer a nice-to-have. It’s essential.

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