Secondaries Filling Allocation Gaps
Andrea Walne, GP at Manhattan Venture Partners, on getting on the cap table
Large later stage allocations are often less firm than they look, which turns secondary buyers into useful gap fillers rather than outsiders trying to force their way in. Big funds may win a pro rata plus a new round allocation, then find the total check is larger than they want to write, so a secondary specialist can step in, buy stock from existing holders, and help the round clear without the company adding another noisy cap table participant.
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The practical setup is a fund with a very large round slot, sometimes $100M or more, asking whether it can truly fill that entire position. If not, part of the demand can be redirected into late stage secondary purchases or co-invest structures, which preserves access while easing funding pressure on the lead investor.
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This works because secondaries in late stage rounds are often tied closely to primaries. Companies use them to let early investors or employees get liquidity, refresh the cap table, and bring in strategic holders without issuing more shares, which means a buyer helping absorb unmet allocation demand can solve two problems at once, funding and cap table cleanup.
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The constraint is information and process. Outside a company led round, secondary buyers often face thin disclosure, broker noise, and long settlement cycles, which is why the best opportunities usually come through issuer aligned relationships, existing cap table connections, or direct founder introductions rather than open market shopping.
As private rounds keep getting larger and companies stay private longer, this overflow dynamic should become a more regular feature of growth investing. The winners will be the buyers who can behave like quiet extensions of the company and its lead funds, providing liquidity where the cap table needs it rather than just chasing hot names.