Secondaries becoming routine in venture
Dan Akivis, senior associate at Expansion VC, on selling secondary and managing LP relationships
This mindset explains why venture funds often stay paper rich and cash poor for years. An early stage fund can show a large markup on a portfolio company, but unless it sells some shares, LPs get no cash back and the fund cannot prove realized returns. The deeper issue is that private shares are hard to sell on command, because buyers lack company information, companies rarely help educate off cycle buyers, and discounts can stay wide even when the business is performing well.
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In practice, many funds only get liquidity when the company itself runs a tender or lets a new investor buy both primary and secondary shares in a financing. That means the company controls timing, so the fund cannot reliably manage DPI or lock in IRR when it wants to.
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The funds most able to sell early are usually the brands with deep buyer networks. Smaller or less visible managers face a harder problem. They may own good companies valued at $100 million to $500 million, but there is little market coverage, little buyer education, and limited appetite for single name positions.
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The market has been moving toward structures that reduce this friction. SPVs and LP interests can sit above the cap table, which makes them easier to trade than direct company stock. More recently, new brokers and software platforms have grown around secondaries because LP demand for liquidity has become a central pressure point across venture.
The next phase is a venture market where partial exits become a normal portfolio tool, not a rare exception. Funds that can pair better information with better distribution will return cash sooner, raise follow on funds more easily, and treat secondaries as active portfolio management rather than waiting for a single breakout winner to do all the work.