LPs Lack Decision Rights Over Secondaries

This points to a basic mismatch in venture governance, LPs bear the liquidity risk but usually do not get a real say in when a GP turns paper gains into cash. In practice, most LPs commit capital through the LPA, then hear about secondary sales after they happen. That works when distributions are clearly positive, but it leaves the tradeoff between maximizing upside and returning cash largely in the GP's hands, even when off cycle selling can consume significant time and directly shape fund level IRR and DPI.

• The interview makes clear that this is not mainly a legal issue, it is an operating one. Early stage funds rarely have a dedicated secondaries function, so creating liquidity means hunting for buyers, educating them on obscure companies, and running a process that can feel like a full time job.
  1 sacra
• LP involvement is limited partly because venture fund structures are built for delegated discretion. Separate research on private company secondaries notes that direct deal choice does not scale well for large LP programs, so most funds keep sale decisions centralized with the GP even when secondaries become more important.
  2 sacra
• The market has been moving toward more GP driven liquidity. Recent secondaries interviews describe VCs increasingly selling positions to return capital to LPs, and platform operators frame faster decision making and better data flow between founders, GPs, and LPs as the main bottleneck to more liquid private markets.
  3 sacra 4 sacra

The direction of travel is toward more structured LP communication, not full LP voting on every sale. As secondaries become a larger share of venture distributions, the winning firms will treat liquidity like a planned portfolio function, with clearer policies on when to sell, how much to distribute, and how to explain those choices to LPs before the transaction is done.