The Quiet Engine of Venture? Secondaries.

In February, Stripe ran a $3 billion tender offer—not to raise capital, but to buy back shares from early employees whose options were about to expire. Industry Ventures reports that six of the world's ten most valuable startups conducted similar liquidity events in recent quarters. OpenAI, SpaceX, Databricks, ByteDance—all using tender offers as strategic tools.

Yet walk through most VC websites, and secondaries remain the strategy that dare not speak its name.

Here's why that's about to change—and why the first movers will own the next wave of venture relationship building.

The Scale of What's Coming in VC

The numbers tell a story most venture capitalists are ignoring. Industry Ventures estimates the VC secondary market will exceed $120 billion globally this year—the highest ever. PitchBook's latest data projects the direct VC secondary market growing to $60 billion for 2025, up from $50 billion in 2024.

Sydecar found that inflows to VC-focused secondary funds have doubled since 2022, while their data shows the average amount raised in secondary deals has nearly doubled year-over-year, from $969K to $1.8M per deal.

But here's the disconnect: while VC secondary volume explodes, communication sophistication remains stuck in 2015.

Why Liquidity = Content Opportunity in Venture

Here's the logical bridge most VCs miss: VC secondaries aren't just financial transactions—they're decision-making moments that require complex frameworks specific to venture investing.

Unlike primary VC investments (where the value prop is capital and expertise), venture secondary transactions force stakeholders to make nuanced choices about timing, tax implications, equity dilution, and employee retention. These decisions are where relationships get built or broken in the venture ecosystem.

The firms that can guide founders through tender offer strategy, help employees understand vesting implications, and show venture LPs how portfolio-level liquidity planning works aren't just providing transactions. They're becoming the intellectual infrastructure their venture stakeholders rely on.

And intellectual infrastructure becomes content advantage.

The Evidence This Works in VC

We're not talking theory here. Early practitioners are already proving the model in venture:

Industry Ventures has built their entire brand around being the venture secondary market experts, helping them become a go-to source for VCs navigating liquidity decisions.

Lightspeed Venture Partners recently used their secondary market sophistication to launch continuation funds, providing liquidity while retaining their best assets—and they communicated this strategy transparently to LPs.

Insight Partners similarly executed GP-led secondaries and used this as differentiation in fundraising conversations.

These aren't accidents. When Carta reports that tender offers increased in five of the past six quarters they have shared data for, (ending with 3Q24 seeing 26 new offers)—that's 26 quarterly opportunities for VC content creation that most venture firms completely ignored.

The VC Retention Data Points

Morgan Stanley's analysis reveals why this matters beyond deal flow in venture contexts. They found that tender offers "can help foster and develop a culture of ownership while supporting long-term employee retention"—critical for venture-backed companies competing for top talent.

Carta's data shows the demand side in the venture ecosystem: subscription rates and participation rates both climbed by more than 10 percentage points in 3Q24 alone, now up more than 20 percentage points since early 2021.

Translation: employees at venture-backed companies are desperate for liquidity, and the companies providing it systematically are winning the talent war. But where's the VC content connecting tender strategy to retention outcomes? Where are the benchmarks on optimal sizing for employees (Secfi notes it's typically 10-25% of their holdings) or timing around 409A revaluations?

Nowhere—which means the narrative opportunity is wide open for VCs — for now.

Why The Window Is Closing for VCs

Here's why this inefficiency exists and why it won't last: most VCs built their expertise during the ZIRP/venture primary-only era (2010-2021) when venture exits came fast enough that liquidity sophistication didn't matter.

That world is over. Industry Ventures notes that venture-backed companies now stay private for 12 years on average versus 6 years in 1989, with over 1,300 unicorns collectively representing over $4.6 trillion in market value, all locked up.

The venture market has fundamentally shifted from "grow fast and exit" to "grow sustainably and manage liquidity."

The VC LP Pressure

The fundraising angle makes this urgent for venture funds specifically. Valuation Research writes, “Given the closed IPO market and anemic M&A activity, the lack of exit paths from the prior two years has limited LPs’ liquidity and ability to reinvest. Specifically, Pitchbook shows that the annual average distribution as a portion of net asset value of ~5% is at a 14-year low.” The IPO window is slowly creaking open, but it will be a long time, if ever, until it resembles the boom years.

Venture LPs aren't content with asking "what companies did you back?" anymore. They've been saying, for years now "how will you get me liquidity from this 10-year-old fund?"

The VC Platform Play

While VCs sleep on this opportunity, entire businesses are capturing the value in the venture ecosystem:

• Forge builds price discovery specifically for venture-backed company shares

• Hiive creates liquidity hubs around venture portfolio intelligence most VCs don't even track systematically

• Sydecar created a platform specifically for pooling capital to purchase VC secondary shares

• Carta turned tender administration into platform strategy for venture-backed companies

These platforms understand what VCs miss: venture secondary market intelligence isn't just about transactions—it's about becoming essential infrastructure for decision-making in the venture ecosystem.

Your VC Tactical Playbook

If you're a platform lead or communications head at a venture fund, here's your immediate opportunity:

1. Audit Current State When did your portfolio companies last run tender offers? What's your firm's POV on VC continuation funds? Can you articulate your venture liquidity philosophy?

2. Build The VC Framework Map tender mechanics to retention outcomes in venture-backed companies. Develop benchmarks on sizing, timing, tax optimization specifically for venture contexts. Create the intellectual property no VC else has.

3. Publish The VC Insights Launch the industry's first regular "Venture Liquidity Intelligence" content series. Own the category before other VCs realize it exists.

4. Connect To VC Business Development Use liquidity expertise to build relationships with late-stage founders facing retention crises. Make "How do we keep our best people when we can't go public?" your differentiating question for venture-backed companies.

Why This Matters Now for VCs

The bottom line: while everyone chases the next unicorn, the smartest VCs are building relationships around the question keeping venture founders awake: "How do I provide liquidity to employees when we're staying private longer?"

Venture Capital Journal identified 26 firms that are active buyers in the venture secondaries market as of November 2024, up from 12 last July. The space is professionalizing rapidly — family offices, institutions, and all kinds of qualified purchasers are beginning to pile in.

The VCs that answer liquidity questions publicly, consistently, and strategically won't just be executing secondaries. They'll own the intellectual infrastructure of modern venture relationship management.

You don't need to control the entire VC secondary market. You just need to be the venture fund who explains it best—before your VC competition figures out that explanation is the new differentiation.

More next week. Until then: edit ruthlessly, publish bravely, and remember—distribution is compounding.

–Paul

💬 Want help telling your fund’s liquidity story the right way? I’m building a new toolset for GPs, platform leads, and heads of IR. If venture liquidity storytelling could transform your fund's competitive position, drop me a line.