Venture Capital Needed a Liquidity Layer. Secondaries Created It.

by Fiona Darmon and Merav Weinryb, Managing Partners of Sunvest Capital Partners

A continuation of “How the Secondary Market Is Reshaping the Path to Building Global Technology Companies” Published January 13, 2026

Private markets have scaled into a multi-trillion-dollar asset class, yet one critical component lagged behind: liquidity.

Venture-backed companies now remain private for 12 to 18 years. Capital formation has matured and institutional ownership has deepened, but the mechanisms for distributing liquidity have not kept pace.

Public markets solved this long ago. Exchanges like the NYSE and Nasdaq do not merely facilitate IPOs; they provide a continuous secondary liquidity layer, enabling capital reallocation, price discovery, and risk management. That liquidity layer is what allows primary markets to function at scale.

Private markets have long had secondary mechanisms, particularly in LP portfolio transactions, but in venture capital a dedicated liquidity layer is now emerging. In that context, 2025 marked a clear inflection point.

Venture Secondaries Are Becoming a Third Exit Channel

In our previous piece, we argued that venture secondaries are structural, not cyclical, a permanent evolution in how venture capital operates.

The data now confirms that shift.

US venture secondary transaction value reached approximately $106.3 billion in 2025, according to PitchBook’s Annual US VC Secondary Market Watch, which tracks secondary transactions in venture-backed companies and venture fund stakes. Measured against IPO and M&A activity, venture secondaries now represent close to one-third of total venture exit value.

That scale is not incremental. Venture secondaries have become a third institutionalized liquidity pathway alongside IPOs and acquisitions.

In a separate review, international investment bank Jefferies estimated global secondary transaction volume at roughly $240 billion in 2025 in its 2025 Global Secondary Market Review across the broader private markets ecosystem, spanning LP portfolio sales and GP-led continuation vehicles across multiple asset classes. Secondary markets have long existed in private equity and other asset classes; venture secondaries are increasingly becoming part of that institutional market structure.

The Democratization of Liquidity

The rise of venture secondaries is not only about volume. It is about access.

Private companies are staying private significantly longer than before. As we discussed in our previous article, citing research by Professor Jay Ritter of the University of Florida, the median age of companies at IPO has risen dramatically over the past two decades.

More recent data shows the trend continues: the median age at IPO increased from roughly 6.9 years in 2014 to approximately 11 years today, according to Morningstar research.

As more value creation occurs during the extended private phase, relying on a single liquidity event, IPO or acquisition, becomes insufficient.

Venture secondaries distribute liquidity across the company lifecycle.

Early employees can realize gains without leaving. Founders can partially de-risk without relinquishing control. LPs can rebalance exposure mid-cycle. Capital no longer moves only at the moment of sale or listing.

The market is also institutionalizing. Venture secondary dry powder reached approximately $11.8 billion as of mid-2025, nearly threefold higher than in 2022, yet still represents only about 3.9 percent of primary venture capital, according to the same PitchBook research, underscoring how early the venture secondary market remains relative to the scale of the asset class.

Large-scale tender activity has also normalized. In 2025, Nasdaq Private Market hosted tenders totaling more than $13 billion, with multi-billion-dollar programs at companies such as OpenAI and SpaceX illustrating the scale of recurring liquidity.

Secondary markets are moving from opportunistic trades toward structured programs.

PitchBook estimates that between $62.5 billion and $120.9 billion was traded through US venture direct secondaries in 2025, with a midpoint estimate of roughly $91.7 billion, suggesting that company-level transactions now represent the largest component of venture secondary activity. As companies remain private longer and accumulate larger employee and investor bases, liquidity increasingly occurs at the company level rather than solely through fund portfolio sales.

Liquidity is becoming infrastructure.

More Exit Paths Could Expand the Asset Class

For decades, venture offered two liquidity channels: IPO and acquisition.

Today, a third pathway is becoming institutionalized. As PitchBook’s year-end analysis highlights, secondary transactions now account for a meaningful share of venture exit activity. When venture secondaries represent roughly one-third of venture exit value, they are no longer a complementary liquidity tool. They are part of the exit landscape itself.

This shift is more than statistical. It reflects a broader change in how venture liquidity is understood. What was once often viewed as a signal of distress or forced selling is increasingly recognized as a legitimate and structured exit pathway for founders, employees, and early investors.

As companies stay private longer, allowing capital to circulate during the private lifecycle becomes essential rather than exceptional.

More exit optionality reduces perceived illiquidity, increases investor confidence, and attracts capital.

Infrastructure compounds.

Israeli Secondaries: Expanding Exit Optionality in a Maturing Market

Israel offers a useful case study. Long a hub of next-generation companies, the ecosystem has produced independent global champions such as Check Point, Wix, Monday.com, eToro, and Via, while also generating approximately $88 billion in signed M&A activity in 2025 alone.

As the market matures, the question is not whether Israeli companies can build global businesses. They already do. The question is how to expand the liquidity pathways available to founders, employees, and early investors as companies remain private longer and scale globally.

Whether companies ultimately exit through acquisition or grow into independent public platforms, the private growth phase is longer and more capital-intensive than ever. Investors and management teams increasingly seek flexibility to continue building without being forced into premature exits for liquidity reasons.

Similar to trends observed in global venture secondary markets, as highlighted in PitchBook’s research, Israel is also seeing a rise in direct secondary transactions.

Sunvest Capital Partners, a secondary investment firm focused on Israeli growth-stage companies and operating on the ground within the local venture ecosystem, accesses these companies through a range of secondary transaction structures, including LP stake transactions, GP-led continuation vehicles, and direct secondaries in private companies.From that vantage point, we have observed a notable shift in deal flow composition. Over the past 24 months, direct secondary transactions have represented more than 40 percent of the opportunities we have evaluated, reflecting a growing share of activity as IPO and M&A timelines lengthen and companies increasingly rely on structured employee liquidity programs. LP stake transactions represent the next largest category of opportunities we review.

A functioning secondary layer provides that flexibility. Founders can partially de-risk without relinquishing control. Early investors can return capital while remaining supportive. LPs can rebalance exposure while staying committed.

Liquidity becomes an enabler of independence, not a trigger for sale.

Liquidity Stands to Expand the Capital Base

Markets with a deep, reliable secondary layer tend to attract broader participation. As liquidity becomes more predictable, private markets shift from “locked capital” toward “managed duration.”

Institutional allocators often cite illiquidity and long duration as the primary constraints to venture capital allocation. As secondary markets deepen, they may gradually reduce that barrier by providing clearer pathways for interim liquidity.

In venture capital, that shift is increasingly visible. As companies remain private longer and a larger share of value creation occurs before IPO, venture secondaries are beginning to play the role the market long needed them to play: allowing capital to circulate during the private phase of company building.

Liquidity not only provides exit optionality; it has the potential to materially expand the investor base for venture capital.

For years, venture secondaries were viewed as a niche tool — occasional transactions, often associated with opportunistic or distressed selling.

Today they represent something different.

They are becoming a recognized and institutionalized part of how venture capital returns capital, manages duration, and sustains the next cycle of investment.

Venture markets did not lack capital. They lacked circulation.

Venture secondaries are now beginning to provide it.

Disclaimer: The views expressed in this article are the authors’ own and do not constitute investment advice. This article is provided for informational purposes only.

https://medium.com/@fiona_88378/private-markets-needed-a-liquidity-layer-secondaries-created-it-dd6304076bd5?postPublishedType=repub