SeedBlink Blog

In an era where flexibility and strategy drive venture capital, secondary deals are becoming the go-to choice for investors. They allow established stakeholders to realize returns and new investors to access promising startups—creating a win-win dynamic for everyone involved.

The rise of secondary markets in the recent years highlights their growing role in shaping the future of startup funding. Let’s dive into why these deals are catching the attention of individual and institutional investors alike.

What makes Secondary Deals special?

Unlike primary rounds, where companies sell new shares to raise fresh capital, secondary deals involve the resale of existing shares. This means no new equity is created, but money changes hands between buyers and sellers.

For investors, secondaries provide an opportunity to buy into high-potential startups at a later stage, often at more favorable terms compared to primaries. Sellers, meanwhile, gain liquidity without having to wait for an IPO or acquisition. It’s a dynamic that benefits all parties—and the ecosystem at large.

The numbers speak for themselves

The growing interest in secondary markets is undeniable. In 2023, the European secondary market saw volumes rise by 5% year-over-year, even amid global economic challenges. This resilience highlights how secondaries are becoming a critical part of portfolio management for investors of all sizes.

Institutional investors, in particular, are leaning into secondary opportunities. A survey by Probitas Partners showed that 37% of respondents identified special situations funds—including secondary deals—as a key focus for 2024.

In the first half of 2024, global secondary market volume reached $68 billion, marking a 58% increase from $43 billion in the same period in 2023 (Jefferies)

Institutional investors are increasingly recognizing the value of secondary markets. Notably, Blackstone raised the world's largest secondaries fund, Strategic Partners IX, amassing $22.2 billion dedicated exclusively to assisting limited partners and general partners in offloading assets on the private equity secondary market (PitchBook)

At SeedBlink, we’ve tapped into this momentum. In 2023, we launched a bulletin board to allow investors to trade shares in portfolio companies. By 2024, we expanded this with a full-scale Secondaries platform, targeting European rising stars and pre-IPO giants.

Why buyers win

1. Access to Established Startups

Secondaries often focus on companies with proven track records—think revenue growth, market traction, or pre-IPO positioning. For buyers, this means less speculation and more informed investment decisions.

2. Discounts to Net Asset Value (NAV)

Secondary shares are frequently sold at a discount, making it possible to acquire high-value equity at a lower cost. This happens because sellers may prioritize liquidity over maximizing their sale price.

3. Shorter wait times for returns

Unlike primary investments, where returns hinge on a long-term exit strategy, secondary deals often involve startups nearing significant milestones, such as IPOs or acquisitions. This translates to potentially quicker liquidity for investors.

Why sellers benefit

1. Liquidity for founders and employees. Imagine being a startup employee with stock options that could someday be worth millions—but only on paper. Secondaries allow employees to convert those options into cash, reducing financial stress and rewarding their contributions.
2. Rebalancing for early investors - for early backers like angel investors or VCs, selling shares in the secondary market frees up capital for new opportunities. It’s a way to lock in gains while staying engaged in the ecosystem.

How startups gain from Secondaries

You might think secondaries don’t directly benefit startups, but they play a key role in fostering stability. By offering liquidity, startups can retain top talent and maintain goodwill among their stakeholders. Additionally, bringing in new investors through secondary deals often introduces strategic advantages—be it industry expertise or broader networks.

At SeedBlink, we’ve seen how secondaries transform the investing landscape. Our bulletin board in 2023 allowed investors to trade shares within our portfolio, creating new liquidity options. By 2024, we expanded into a comprehensive Secondaries platform, offering access to Europe’s most exciting growth-stage companies and pre-IPO stars.

The maturation of the secondary market is reshaping European venture capital. With volumes climbing and institutional interest growing, secondaries offer a balanced, strategic way to invest in the future of innovation.

In our next article, we’ll explore how secondary deals are driving growth across the startup ecosystem—fueling innovation, liquidity, and opportunity.

Curious to explore secondary opportunities? Visit SeedBlink’s Secondaries platform today.

See active Secondaries opportunities