SeedBlink Blog

Startups are staying private longer than ever. For both investors and founders, this trend has created a new challenge: How to access liquidity? That’s where secondaries come in.

Today, we are meeting with Rando Rannus, General Partner of Siena Secondary Fund, one of the few dedicated secondary-focused venture funds in Europe. He has been a member of the Estonian Founders Society since 2009 and brings over two decades of experience in consulting, entrepreneurship, and venture investing. With Siena, he is helping to reshape how founders, employees, and early investors access value in high-growth, late-stage startups, especially across the Baltics, the Nordics, and Central and Eastern Europe.

During his interview with SeedBlink, he explained how the secondary market is evolving across Europe, shared practical insights on deal structuring and valuation, and described why secondaries are no longer taboo for founders and investors.

Why secondaries matter more than ever?

Startups are staying private longer than ever. A decade ago, venture capital followed a familiar trajectory: invest early and exit via IPO or acquisition within 5 - 7 years. Today, that timeline has undergone significant changes. Klarna took over 20 years to reach IPO readiness. As a result, early investors, employees, and even founders are increasingly facing long periods without liquidity.

“If we go back to the early 2000s, the typical VC growth story was that you invested in an early-stage company, and within five years, there would be an IPO. That was the plan. Today, companies stay private much longer.”

The recent delay in exit events has created a structural gap in the market, highlighting the need for secondary transactions. These provide that mechanism, allowing shareholders in later-stage private companies to sell their equity without prematurely requiring the company to pursue an acquisition or IPO.

“Investors need to get some cash out of it when they're investing in the early stage.”

The increase in supply is only one part of the story. On the demand side, awareness of the secondary market has historically been low. For a long time, secondaries were not widely seen as a viable asset class in venture, especially in Europe.

“From the buy-side, people didn’t even know there was an opportunity to buy into later-stage companies.”

Unlike in the U.S., where some platforms have started offering access to shares in high-profile startups, European investors often lack exposure and insight into how secondary deals work or even exist.

Secondary deals are also enabling portfolio rebalancing. Early investors in companies that have scaled significantly may choose to exit partially, recycling capital into new opportunities.

“What I’ve seen is that secondaries are more about portfolio rebalancing. If an investor entered the seed or pre-seed stage and the company went on to achieve 100x multiple of invested capital, it makes sense to take some cash out to reinvest in new opportunities. If you still believe in the company’s long-term potential, you don’t want to sell everything. What we’re seeing is that it’s more about selling partially, not a complete exit.”

The anatomy of a secondary deal

What does a secondary deal look like? It’s anything but typical.

Each transaction is unique. While no two deals are the same, Rando tells us that there is a common thread among them: the importance of relationship-building.

“Some deals take years to materialise. The team builds trust with founders, existing investors, and other stakeholders long before any funds are exchanged. We try to build relationships early. Sometimes one or two years before we do anything.”

To better understand this, Rando guides us through Siena’s investment approach, which targets later-stage venture-backed companies that meet specific criteria. These include:

• Strong growth trajectory, at least €10M in annual revenue, grow at 50% or more per year, and are valued at over €100M.
• Strong cap tables with existing tier-1 venture capital investors.
• Defined exit potential, ideally within a 3–5 year window. The fund seeks mature companies to be on a credible path toward IPO or acquisition.

When the time is right, it conducts due diligence before committing to any transaction. Here, the process typically includes the following steps:

• Reviewing company data: investor decks, revenue and growth projections, latest reports, and cap tables, including detailed liquidation waterfalls to assess different share classes and rights.
• Analyzing industry context: Siena compiles an internal investment memo with a full market landscape review, exit scenarios, and peer comparisons to understand relative valuation multiples.
• Valuation discipline: Rando is clear that there’s no “simple math” for pricing secondaries. The team considers the timing and terms of the last funding round, company performance since then, current market conditions, and the specific rights attached to the shares being acquired.
• Founder and team conversations: A key part of Siena’s approach is conducting at least one direct call with the founder or senior management. These conversations aim to surface qualitative insights not captured in formal documentation, such as company culture, team dynamics, and strategic clarity.

Siena operates very differently from some U.S. secondary brokers, who often bundle shares from anonymous sellers or use forward contracts that offer little transparency into what you’re buying.

“We try to minimize risk by understanding as much as possible about what we’re buying.”

Their approach gives institutional and sophisticated investors confidence that secondary investments can be evaluated on par with primary venture deals, using data-driven underwriting and governance oversight.

How do you solve the valuation puzzle?

Finding the correct valuation of shares in private companies is a complex process beyond applying a fixed discount to the last funding round.

“There is no simple math. Each transaction requires a contextual evaluation based on multiple variables.”

Siena does not rely on standard formulas when assessing secondary share value. The last round valuation serves only as a reference point. Instead, the team considers:

• The timing of the last financing round and broader market conditions.
• Operational progress since the last raise, particularly in revenue growth or material changes in performance.
• The specific share class being acquired, including associated rights, preferences, and position in the capital structure.
• Market benchmarks, including current public comparables and recent private transactions in the same sector.

In one recent case, for example, Rando noted that one company was trading at exceptionally high multiples, while others in the same vertical were valued at significantly lower levels, which raised the question whether the requested valuation was reasonable.

“We’re analysing a couple of cases in the same industry space. There is one company with exceptionally high valuation multiples, two or three times higher than its peers in the same sector. So, how do you value that? You need to look at historical transactions and have those internal discussions. Most likely, if you’re a conservative investor trying to manage risk in venture, you’ll lean toward the more conservative side, including when it comes to valuation multiples.”

Trends and expectations in the secondary market

The secondary market for venture-backed startups is still in the early stages of development, particularly in Europe. Rando says the opportunity is growing rapidly, and we are just scratching the surface.

He also points out that in recent years rising interest rates were the single most significant factor in reshaping valuations in both public and private markets. As capital became more expensive, inflated valuations corrected quickly, creating more realistic pricing for secondary deals.

Private markets are still growing, but we don’t see many IPOs or M&A events, so the pressure for secondary markets will increase. If you compare the global secondary market size to the total market cap of startups, it remains a relatively small portion and should be growing faster.

“If we talk about the startup landscape in CEE specifically, the total market cap is around €100 billion. The annual liquidity need is roughly 2–3%, which means several billion euros annually. With our €50 million fund, we’re just scratching the surface.”

What founders need to know about the secondary market

For founders and employees, secondaries are becoming more familiar. While previously viewed as a negative signal, controlled and modest secondary transactions are now seen as a way to support retention and alleviate personal financial pressure. Secondary deals help accelerate startup growth by unlocking liquidity, allowing founders and early employees to cash out.

“The first employees who have been there for eight years would like to see some real cash out of their stock options.”

Rando and his team discussed recently how this creates a flywheel effect, where each exit or sale builds momentum in the ecosystem, leading to increased capital, more startups, and more experienced talent reinvesting their time and money.

Bolt is one of the fastest-growing startups in Europe, having built a strong culture of employee ownership. While it remains a private company, Bolt has enabled employees to cash out some of their vested options through secondary sales, providing them with liquidity to invest in other startups or achieve personal goals.

When to consider secondaries?

Not every company is ready for a secondary deal. According to Rando, it is generally not recommended before Series B, unless there is a specific need, such as cleaning up a cap table or resolving an unusual equity situation.

The ideal timing is when a company is more mature, typically seven to ten years old, with a strong growth trajectory and clear exit potential. This is when early employees, angels, or co-founders who are no longer active may reasonably seek liquidity.

In earlier years, selling secondary shares, especially by founders, was seen as a negative signal. That perception changed. Now, a modest secondary sale is often seen as a healthy action.

“Ten or fifteen years ago, it was considered taboo if the founder was selling. It’s not about selling out. It’s about relieving the pressure.”

Secondaries can also be used to clean up complex or messy cap tables, particularly in Central and Eastern Europe, where early angel rounds may have resulted in long investor lists and fragmented ownership.

Another critical piece is internal education. Many startup employees still don’t understand the value of their stock options, particularly in emerging ecosystems.

“Some people left companies without exercising their options, and missed out on thousands, or tens of thousands, just left on the table.”

About Siena Secondary Fund

Siena Secondary Fund is a recently launched €50 million venture fund focused exclusively on secondary transactions in high-growth, late-stage European startups.

Siena is helping build a more mature and accessible secondary market across the Baltics, Nordics, and Central and Eastern Europe. The fund provides liquidity to early investors, employees, and founders, targeting companies with over €10M in ARR and at least 50% growth.

Want to learn more?

If you’re curious about how secondaries work, why they matter, and how they can unlock liquidity for employees, founders, and investors, dive deeper on the SeedBlink blog and register for our newsletter.

Are you interested in a secondary deal on SeedBlink? Check out our current offerings.****