Secondary Pricing Requires Cap Table Underwriting
Andrea Walne, GP at Manhattan Venture Partners, on getting on the cap table
The key mistake in secondary is treating discount as the asset, when the real asset is company quality and how close the last round price is to current reality. In practice, a flat rule like buy anything at 40% off can miss the best names, because strong late stage companies with fresh momentum, trusted investors, and visible paths to IPO often clear closer to last round, or even above it. The real work is underwriting the business, the share class, and the seller's reason for selling, not just applying a blanket markdown.
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Secondary pricing is heavily shaped by information quality. Buyers often use public comps, capital structure analysis, and whatever company data they can get, but when disclosure is thin they fall back to generic discounts that can badly misprice fast moving companies.
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The discount itself is not standard. One investor in this market described 20% off as a common historical rule of thumb, but also noted that some very strong businesses trade at parity or a premium, especially when demand is high and an IPO feels close.
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What looks like a cheap price can also be the wrong security. Common versus preferred, liquidation preferences, dilution protections, and how deep the preference stack is all matter. A headline discount can disappear once the capital structure is unpacked.
As the secondary market matures, pricing will move away from crude round based discounts and toward something closer to public market underwriting. The winners will be the buyers who can judge business momentum and cap table structure better than the crowd, not the buyers who simply demand the biggest haircut.