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1.16.25

2023 – 2025E: How Big Is The Secondary Market for Venture Capital?

Blog Post

In 2019, Industry Ventures published “How Big is the Secondary Market for Venture Capital?”, which detailed our estimate of the size of the US secondary market for venture capital as well as a discussion around the driving forces behind the market’s growth. We updated our analysis in 2022: How Big Is the Secondary Market for Venture Capital? An Updated View to a $130B Market to estimate that the global total addressable market (TAM) for venture secondary transactions would surpass $130B in 2023. Now, as we enter 2025, we’ve revised our historical view of the global venture secondary TAM over the last few years as well as our outlook for the year ahead.

Following the post-COVID tech bubble of 2021, we saw a correction in the valuation of public tech companies in 2022 that put a damper on venture secondary activity. We estimate that the venture secondary market decreased in 2022, driven by a widening “bid-ask spread”, with sellers of venture assets anchored to peak valuations and buyers quickly updating their bids to reflect the new reality of public comps. While it took several quarters for funds to write-down the value of their venture assets and companies to adjust their internal valuation measures, we believe that valuations bottomed out sometime in the back half of 2023. As a result, bid-ask spreads tightened, and secondary transaction volume re-accelerated meaningfully in 2023 and into 2024. This recovery was only aided further by investor enthusiasm around the potential of generative AI to benefit both large incumbent platforms and a new wave of “AI native” players.

With a continued lack of exits coming from IPOs and M&A, there is a growing backlog of company shareholders and LPs in venture funds who need liquidity. We believe this will lead to the highest ever venture secondary TAM, in excess of $120B globally, in 2025. Our estimates include both direct secondaries (sales of individual company shares and portfolios of shares) and LP interests (investments made into venture funds). While sizing this market is difficult, due to the variety of secondary deal types and lack of visibility into non-brokered deals, we are seeing evidence of this trend playing out in the marketplace and in our internal pipeline of investment opportunities.

In the direct secondary market, we have seen an increase in the number of large, company-led secondary tender offers. Some examples in the public domain include Canva’s $1B+ tender, Stripe’s tender at a $70B valuation, and Databricks’ $10B secondary at a $62B valuation.1,2,3 In the LP secondary market, we have seen LPs increasingly demanding that fund managers return capital, before LPs commit further capital to new funds. This dynamic has led to an increase in both LP-led and GP-led secondaries, and we’ve seen the rise of the “Continuation Fund” structure in 2024 with high profile transactions announced by GPs such as Lightspeed, NEA, and Insight Partners.4,5,6

In summary, we believe the global secondary market will be larger this year than ever before and will continue to grow in lock step with the pace of primary investment into the venture market.

Estimated global venture capital secondary transaction volume for 2025

Source: Pitchbook; Industry Ventures Market Intelligence (as of January 2025).

Note: Consistent with our previous estimates, the venture secondary market remains difficult to size compared to other financial markets; secondary transactions occur in many forms including share transfers, LP transfers and fund recapitalizations, continuation funds, etc., and none of these are consistently reported or publicized. Different reports use different methodologies, which result in a wide range of estimates.7

Disclosures

The views set forth herein are solely those of the authors and do not necessarily reflect the views of Industry Ventures. The information and views expressed are generic in nature and are not an offer to sell or the solicitation of an offer to purchase interests in any investments or services. Certain information contained in this article may constitute “forward-looking statements.” Any projections or other estimates contained herein, including estimates of returns or performance, are “forward looking statements” and are based upon certain assumptions that may change. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. There can be no assurance that the forward-looking statements made herein will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by Industry Ventures, or any other person, that the objective and plans of Industry Ventures will be achieved. All forward-looking statements made herein are based on information presently available to the management of Industry Ventures and Industry Ventures does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of Industry Ventures.

This material does not constitute financial, investment, tax or legal advice (or an offer of such advisory services) and should not be viewed as advice or recommendations (or an offer of advisory services).

Of the companies or firms referenced within this material, some are portfolio companies of Industry Ventures or manage funds in which Industry Ventures invests in. The investments shown herein are for illustrative purposes only and are not a full and complete listing. A full listing is available upon request.

Certain information contained in this article (including certain forward-looking statements and information) has been obtained from published sources and/or prepared by other parties, which in certain cases has not been updated through the date hereof. While such sources are believed to be reliable, neither Industry Ventures and any general partner affiliated with Industry Ventures or any of its respective directors, officers, employees, partners, members, shareholders, or their affiliates, or any other person, assumes any responsibility for the accuracy or completeness of such information.