Secondaries Are the New Exit: Why Founders Should Stop Waiting for the IPO
Published: August 2026 · Desert Gate Capital Research Desk · Dubai, UAE
7-minute read · Secondary Markets · Founder Liquidity · Venture Capital
Every founder has the same mental model of success: build, scale, IPO, ring the bell. It is a clean narrative. It is also, for the vast majority of venture-backed companies, fiction. The median time to IPO from first institutional funding now exceeds ten years. Most companies never get there at all. And yet founders continue to treat the IPO as their primary — often only — liquidity strategy. That assumption is becoming increasingly expensive.
While founders wait, a parallel market has quietly matured into something more consequential than a workaround. Secondary transactions — the buying and selling of private company shares between investors — have become the single largest source of venture liquidity in the market today.
The Data Reality
The numbers no longer support treating secondaries as a niche sideshow. In 2025, global secondary market volume reached approximately $240 billion, a 41% increase over 2024’s then-record $162 billion, according to data from Jefferies, PJT Partners, and Campbell Lutyens. GP-led transactions alone grew 51% to $106 billion, while LP-led deals rose 34% to $120 billion.
The venture-specific picture is equally striking. According to Carta, total VC secondary transaction value hit $61.1 billion in the twelve months ending June 2025. That figure surpassed the combined value of all VC-backed IPOs over the same period, which stood at $58.8 billion. Read that again: more capital changed hands in private venture secondaries than through every venture-backed public listing combined.
PitchBook’s Q2 2026 data extends the trend. In the trailing twelve months through Q2 2026, the US venture secondary market reached $121.7 billion, approaching its all-time peak.
Yes, 2026 has seen a rebound in IPO capital — headlined by SpaceX’s record listing. But several major 2026 IPOs are already trading below their debut prices, according to PitchBook’s analysis. The public market’s welcome mat is not as warm as the headline numbers suggest.
The Core Thesis
DesertGate Capital’s position is straightforward: secondary markets have evolved from a distress mechanism into a strategic capital tool, and founders who ignore them are leaving value — and optionality — on the table.
Three structural shifts underpin this view.
First, supply has forced the market open. Depressed M&A and IPO activity through 2022–2024 created an industrywide pileup of assets stuck in aging funds. General partners need distributions. Limited partners need returns. The secondary market became the pressure valve, and the infrastructure built to serve that pressure is now permanent.
Second, frequency has normalised the behaviour. Carta reported 396 tender offers on its platform in 2025 — up 62% from 2024 — with more companies executing tenders in Q4 2025 than during the prior peak in Q4 2021. The average interval between tender offers at a given company collapsed from 899 days in 2022 to 132 days by 2025. Companies used to offer liquidity once every two and a half years. Now it is roughly every four months.
Third, participation rates signal demand. In H1 2025, the median subscription rate for Carta-managed tenders reached 99.9%, while the median participation rate climbed from 36.6% to 56%. When liquidity windows open, nearly everyone walks through them. Across 2025, 16,538 employees sold equity through tender offers — the highest annual total on record, per Carta.
The Institutional Lens
What do sophisticated market participants see that founders often miss? Three things.
Pricing is bifurcated, not uniformly discounted. The common founder objection to secondaries is: “I’d have to sell at a discount.” Sometimes. Typical secondary discounts range from 10% to 30% depending on asset quality and market conditions. But this is not a universal rule. In February 2026, employees at Clay, Linear, and ElevenLabs participated in tender offers at valuations up to 60% above their last funding rounds. Elite names in AI, space technology, and fintech infrastructure routinely clear at or near last-round marks. The discount is a function of the company’s quality and trajectory, not an inherent feature of the secondary market.
Board-sanctioned liquidity is a retention tool, not a concession. Companies that provide structured secondary programs retain talent more effectively than those that force employees to wait for a hypothetical exit. SpaceX has run tender offers roughly every six months for the last four years — not because it needs to, but because it understands that liquid equity is more motivating than illiquid paper.
The alternative is worse. If the board does not provide a sanctioned liquidity path, employees and early holders will seek one anyway — through Forge, EquityZen, Hiive, or Nasdaq Private Market. Unsanctioned sales create cap table complexity, information asymmetry, and reputational risk. Structured secondaries are not a leak; they are a controlled release.
The Strategic Framework
DesertGate Capital recommends founders evaluate secondary liquidity through a staged approach rather than treating it as a binary decision.
Stage 1 — Baseline Assessment
Before any secondary activity, establish your current ownership position, vesting schedule, and tax exposure. Understand your ROFR (Right of First Refusal) obligations and any transfer restrictions in your shareholder agreements.
Stage 2 — Board Alignment
Secondary transactions are most effective when board-sanctioned. Propose a structured tender or liquidity program with clear parameters: who can sell, how much, at what price mechanism, and on what timeline. Companies with board-approved programs see tighter pricing and faster execution.
Stage 3 — Platform Selection
Match the platform to the transaction type. Nasdaq Private Market for company-sponsored tenders. Forge or EquityZen for individual-initiated sales of high-profile pre-IPO stock. Hiive for competitive fee structures across a broader range of company sizes. Fees range from 2% to 5% per side depending on the platform.
Stage 4 — Pricing Strategy
Anchor pricing to a defensible methodology — recent 409A valuation, last primary round, or independent secondary market comps. If your last round was 2021 vintage, expect a steeper discount. If it was 2024 or later, the gap is typically narrower.
Stage 5 — Ongoing Programme Design
The most sophisticated companies treat secondaries not as one-off events but as recurring programmes. Move from ad hoc tenders to scheduled windows — quarterly or semi-annually — that give employees predictability without destabilising the cap table.
Conclusion
The IPO remains a milestone worth pursuing. But treating it as the only milestone — the singular event that converts years of work into tangible value — is a strategic error that costs founders optionality, retention leverage, and personal financial resilience.
When secondary transaction volume exceeds public listing volume, when tender offer frequency has compressed from years to months, when participation rates approach 100% — the market is not sending a subtle signal. It is sending a verdict.Founders who build liquidity into their capital strategy are not cashing out. They are building companies that can afford to be patient about the exit precisely because they are not desperate for one.