Historically, secondaries provided a one-off liquidity event after primary investments. Now, participants in secondary funds are beginning to transact secondaries of their own secondary holdings. Like mature asset classes where secondary trading exceeds primary issuance, this compounding turnover and velocity could make the venture growth secondary market larger than the primary market over time.

The secondary market is no longer just a "knee-jerk reaction" for LPs to rebalance portfolios during downturns. Sophisticated LPs now use it programmatically as an active management tool to gain liquidity from older vintages, prune non-core manager relationships, and adjust sector exposures, offering flexibility beyond the traditional 10-year fund life.

Sophisticated investors no longer use secondaries just to quickly build a private equity program. The strategy has matured into a core allocation, valued for offering faster deployment, better cash flow control, and consistent performance across market cycles.

The traditional VC model of waiting for an IPO or acquisition is obsolete. With companies staying private for 20+ years, firms must develop the skill of actively selling positions in secondary transactions to provide necessary liquidity for their LPs.

Just as buyout funds began selling portfolio companies to other buyout funds post-2000, VCs now increasingly exit via secondary sales to other VC or PE firms. This has become a dominant liquidity path over traditional IPOs or strategic M&A.

Rather than making emotional decisions, top VCs now use a formulaic approach to secondaries (e.g., "sell 15% of a position to return 0.5x of the fund"). This codification makes the process transparent to both LPs, who want to see distributions, and founders, removing guesswork.

The secondary market began after 2000 by buying failed corporate VC portfolios for 10-40 cents on the dollar. Today, it has completely flipped; sellers are healthy, and transactions are typically done at a gain, not a loss, making it a core liquidity path.

With companies staying private for 15+ years, the traditional VC model of waiting for an IPO or M&A is obsolete. Early-stage investors must now actively manage their portfolio by selling positions in secondary markets to realize gains (DPI) and return capital to LPs.

Secondary markets have grown to record volumes, representing a significant portion of venture activity. For VCs and employees, selling shares in these markets is becoming as common an exit strategy as traditional IPOs or acquisitions, providing crucial liquidity.