Economic nature of the secondary market
The secondary stock market (secondaries) consists of share transactions without the company's participation. They are executed by current shareholders.
Late-stage names like Stripe, OpenAI, Anthropic and Revolut keep their primary rounds closed, letting in mostly strategic and brand-name capital. SpaceX was the reference asset of this kind until it listed on Nasdaq in June 2026 — and its debut became the case study for why pre-IPO exposure through an SPV is not the same as owning a listed share. The secondary market is the side door into those companies: an ordinary investor can pick up an allocation here, usually below the last round. The discount is not a fixed number; across 2025 the average secondary changed hands between roughly 13% and 29% under the most recent primary price, and in the hottest stretches about one deal in five cleared at a premium, when demand for AI exposure ran ahead of supply. Some of the largest names skip the open market and run their own tender offers, setting a single clearing price at which employees may sell a slice.
On one hand, secondaries allow early investors and founders to obtain liquidity and lock in profits. On the other hand, they affect company valuation and compete with fundraising — which is why deals proceed under conditions of high confidentiality.
Two forces built this market: companies now stay private far longer, often a decade or more, so paper wealth accumulates with no exit while employees, founders and early funds all look for a way to turn equity into cash. Since 2022 the IPO window has been narrow, which pushed that pressure onto the secondary market rather than the public one. Buyers, in turn, get a route into franchise names long before any prospectus appears.
Deal sourcing. Experienced investors work with ESOP holders of target companies, analyse hiring and termination data, and track the financial position of key executives — so the investor is in the right place when a need for liquidity emerges.
Secondary market ecosystem
Secondary shares are sold on a non-public market with restricted access to participants:
Founders
Founders of successful startups are often wealthy only "on paper." In reality, many founders continue to live on a salary that may be incommensurate with the theoretical value of their stake, which is only available for sale in 3–5 years at IPO.
The secondary stock market gives founders the opportunity to partially monetize their stake before exit. By selling a small portion of their shares (typically 5–15%), founders can address basic financial needs while maintaining control and interest in growth.
Experienced founders often synchronize the sale of part of their shares with major funding rounds, which allows them to minimize negative perception by the market and investors. However, information about such deals rarely becomes public, since it can be perceived as a signal of the founder's lack of confidence in the company's prospects.
Option holders (ESOP)
Like founders, ESOP holders often become active participants in secondary deals when liquidity needs arise, such as when purchasing housing, obtaining education, or due to personal financial circumstances.
Employee share sales often encounter corporate barriers. The boards of directors of many startups actively resist secondary transactions, fearing dilution of shareholder structure and potential conflicts of interest. Companies implement mechanisms restricting share transfer and requirements for right of first refusal to the company itself.
Some large startups, such as Stripe, Airbnb, and Carta, have employee share buyback programs, organizing regular liquidity windows during which option holders can sell a certain percentage of their shares to company-approved investors.
Early investors
Early investors (angels and venture funds) often become active participants in the secondary market due to objective economic constraints of the venture model. A typical venture fund has a lifespan of 10-12 years, after which it must return funds to its investors (LPs). When companies remain private for longer periods, secondary sales become a necessary mechanism for ensuring liquidity.
Factors prompting early investors to sell shares on the secondary market include the need to demonstrate returns (DPI) to raise funds for subsequent funds, portfolio diversification and risk management, as well as capital reallocation to new projects with potentially higher returns.
Financial intermediaries and funds
Financial intermediaries form the secondary market infrastructure and include investment banks, specialized funds, and marketplaces such as EquityZen, Forge Global, and Nasdaq Private Market. Intermediaries not only connect sellers and buyers but also provide pricing, legal deal structuring, and regulatory compliance.
The economic model of intermediaries rests on a fee taken when a deal completes, and the published rates differ by venue and by structure: Forge puts its own direct-secondary fee at "typically between 2-4%", with fund and SPV structures costing more once the manager's own fee is added. Additionally, many intermediaries develop supplementary services such as comprehensive private company analytics, syndicated investment organization, and deal structuring advisory, which creates additional revenue streams and strengthens their positions in the secondary market ecosystem.
Deal structure and mechanics
The process of selling secondary shares always consists of a sequence of stages, each with its own characteristics and requiring specific expertise:
1. Target identification and share price per share (PPS) determination
Valuation methodologies include comparable analysis, discounted cash flow (DCF) method, and analysis of recent investment rounds.
Return benchmark. 2–4x over a 12–24 month horizon is the standard target for a secondaries portfolio.
2. Identification of shareholder for sale
Finding a willing seller is the real bottleneck. Supply comes from former employees past their option-exercise deadline, early angels who want liquidity, and ESOP holders who need cash before an IPO that keeps sliding. The work is matching a credible holder to a clean block, then confirming they actually own what they are offering, free of pledges, earlier sales or spousal claims that could surface at closing.
3. Comprehensive due diligence
Includes analysis of corporate documents, financial statements, intellectual property rights, and contractual obligations. Since the deal is often discussed without board and recent investor participation, access to pitch deck and recent materials is often limited.
4. Deal structuring
Three shapes dominate, and each trades a different mix of control, cost and certainty. A direct transfer moves the shares into the buyer's name once the company signs off. An SPV pools several buyers into one vehicle that holds the block, which keeps the cap table tidy and lets smaller cheques clear together. A forward contract is used when the holder cannot transfer yet: the buyer pays today for delivery later, at the IPO or when a lock-up ends, and carries the risk that delivery never happens.
5. Corporate consents and preemptive rights
Most cap tables carry a right of first refusal: before any outside sale closes, the company or its existing investors can step in and buy the block at the agreed price, usually inside a 30-day window. The transfer also needs board sign-off, and the two together routinely add 30 to 60 days to the timeline. Until both clear, the buyer holds a signed agreement, not the stock, which is exactly why forward contracts and SPVs exist.
6. Deal closing (closing deliverables)
Includes updating the company's cap table, issuing and transferring share certificates to the new owner, conducting settlements, share transfer, and issuing certificates.
Where to buy: the venues
Four venues carry almost all family-office and private access to this market, and they are not variants of one another. Two run marketplaces where a buyer meets a seller, one sells the issuer's own buyback, and one packages single names into funds. That difference decides the commission, the ticket, what the buyer ends up holding and how much of the price is visible before signing.
| Venue | Regulatory model | What the buyer ends up holding | Minimum | Commission | Price disclosure and completion |
|---|---|---|---|---|---|
| Hiive | FINRA broker-dealer and ATS, SIPC member, Regulation Best Interest; exempt market dealer registered with certain Canadian securities commissions; trading as Clarity (Clarity Capital Limited) since 22 September 2026 | Either a direct transfer onto the issuer's register, or an interest in a single-asset SPV on which the platform usually charges neither management fee nor carry | Around $25,000, rising to $100,000–250,000 on the most sought-after names | Up to 5.75% from the seller and, where a buyer commission applies, typically up to 4.85% from the buyer, both lower on larger trades; 7.5% on certain private funds (Form CRS of 22 September 2026) | A live order book with visible bids and asks, plus the free index of the 50 most liquid names (Hiive50, now the Clarity Liquidity Index). Direct transfers settle in 30–90 days; on the platform's own 2024 disclosure the right of first refusal fired on roughly one direct deal in six and about a quarter never reached delivery |
| Forge Global | US broker-dealer running its own alternative trading system under SEC oversight; part of Charles Schwab since the deal closed on 2 March 2026 | A direct transaction, a single-company fund or a multi-company fund; private securities can also sit in a self-directed IRA through Forge Trust | $100,000 for a direct secondary; certain fund offerings from $5,000 | Typically 2–4% on direct secondaries, higher inside fund and SPV structures where the manager charges on top, before transfer agent, legal and escrow costs | Forge Price is an indicative valuation rather than an executable quote. Cumulative transaction volume on the firm's own figures is more than $18.7bn as at 31 March 2026, across 660+ private companies |
| Nasdaq Private Market | US broker-dealer; a standalone company since July 2021, with strategic investments from SVB, Citi, Goldman Sachs and Morgan Stanley | Shares bought inside a tender offer the issuer itself runs | Set by the tender terms | Set by the tender terms, and normally borne by the issuer running the programme | The issuer controls the process, the clearing price and what is disclosed. Completion risk is low by construction, because the company has already consented — it is the one selling access |
| EquityZen | US broker-dealer that operated for years as a closed, invitation-only platform; bought by Morgan Stanley — announced in late October 2025 and closed on 27 January 2026 | Predominantly a fund interest rather than registered shares, so the vehicle stays on the issuer's register | Typically $10,000–20,000; $5,000 on select deals | Not published | No public order book; pricing is shown inside an invited offering |
The commission is the smallest number in that table and the one buyers look at first. Hiive's headline take of up to 4.85% from the buyer and 5.75% from the seller sits above Forge's 2–4%, yet the two are not comparable rates: Forge's band applies to a direct secondary and rises once a fund or SPV manager charges on top, while Hiive's single-asset SPVs usually carry no management fee and no carry at all. Over a three-year hold, a 2% management fee inside a wrapper costs more than a four-point difference in entry commission.
What the buyer actually receives matters more than either. A direct transfer puts the name on the issuer's register with whatever rights that share class carries. A fund or SPV interest leaves the register untouched and gives a claim on a vehicle, with its own fees, its own manager and its own exit mechanics — which is why EquityZen's fund-first model and Forge's single-company funds sit in a different risk category from a clean transfer, even at the same headline price.
Completion is where the venues separate hardest. A marketplace can only offer the block; the issuer decides whether the transfer happens. Hiive's own numbers put the right of first refusal at roughly one direct deal in six and non-delivery at about a quarter, with 30 to 90 days to settle. A Nasdaq Private Market tender inverts that: the company organises the sale, so consent is not a risk to be priced, but nothing is available until the issuer decides to open a window and invite participants. A buyer who needs a named company on a timetable is choosing between a venue that may not close and a venue that may never open.
Price transparency runs the same way. Hiive publishes a live book and an index, so a position can be marked against something other than the last primary round. Forge publishes Forge Price as an indication and says plainly that it is not executable. A tender has one clearing price set by the issuer. An invitation-only venue shows the price only to the invited. The more transparent the price, the more visible the spread — and the more the buyer can tell how much of the discount is illiquidity and how much is a weak block.
| The situation | The venue | What to accept in exchange |
|---|---|---|
| A specific name is wanted and the price has to be checkable | Hiive | A visible book and a mark-to-market reference, against the real chance that the right of first refusal or a failed delivery returns the money instead of the shares |
| A large direct block, with an institutional counterparty behind the execution | Forge Global | A $100,000 floor and 2–4% before the transfer agent, lawyers and escrow; Forge Price is a reference, not a quote |
| Exposure below the direct-transfer ticket | Forge's fund offerings from $5,000, a Hiive single-asset SPV, or a feeder platform such as iCapital through an existing bank or adviser | A vehicle interest rather than a share, another layer of fees and the manager's exit mechanics |
| Certainty that the transfer will actually close | A Nasdaq Private Market tender | Waiting for the issuer to open a window and invite you, at a price it sets |
| Selling rather than buying | Hiive or the issuer's own programme | Up to 5.75% on the sell side in the open book, against a single clearing price and a capped volume inside a tender |
Second-tier venues, owners and one failure
The four venues above no longer stand alone. Two of them now sit inside large brokerages, two stayed independent, and a second tier of smaller broker-dealers competes on fees and on what the buyer ends up holding. One former venue went into bankruptcy, and its case is the clearest illustration of why the holding column matters more than the price.
| Venue | Owner or status in 2026 | Regulated entity | Access and minimum | Fees | What the buyer holds |
|---|---|---|---|---|---|
| Forge Global | Charles Schwab, deal closed 2 March 2026 | Broker-dealer with its own ATS | $100,000 direct; funds from $5,000 | Typically 2–4% direct | Shares or a fund interest |
| EquityZen | Morgan Stanley, closed 27 January 2026 | Broker-dealer | Typically $10,000–20,000; $5,000 on select deals | Not published | Mostly a fund interest |
| Nasdaq Private Market | Standalone since July 2021 | Broker-dealer | By invitation inside a tender | Usually borne by the issuer | Shares from the issuer's programme |
| Hiive | Independent; trading as Clarity since 22 September 2026 | FINRA broker-dealer and ATS | About $25,000 | Up to 4.85% buy side, 5.75% sell side; 7.5% on certain private funds | Shares or a single-asset SPV interest |
| Augment | Independent | Augment Capital, LLC, member FINRA/SIPC; Augment Advisors, LLC, SEC-registered adviser | Accredited investors; $10,000 per Augment Collective fund | No management fee and no carry on Collective funds | An interest in an SPV-structured fund |
| Caplight | Independent | Caplight Markets LLC, member FINRA/SIPC | Institutional marketplace; 700+ institutional participants on Caplight's figure | Not published | Negotiated blocks; the firm also sells secondary price data |
| Linqto | Chapter 11 filed 8 July 2025, Southern District of Texas; plan confirmed 6 February 2026 | Under SEC investigation at filing | Retail app; sales to ineligible investors were among the matters under investigation | Alleged markups on Ripple shares above the permitted cap | Interests in series LLCs of its LiquidShares vehicle, not the shares; recovery through a liquidating fund or a listed closed-end fund |
Consolidation changes who stands behind the venue rather than how the trade works. A Forge or EquityZen buyer now deals with a subsidiary of Schwab or Morgan Stanley, which reduces the risk that the operator itself disappears, and ties the venue's distribution to those firms' wealth channels. Hiive, Nasdaq Private Market, Augment and Caplight remain independent, and their argument is the same one Hiive makes about itself: a venue owned by no large buyer is not obliged to favour either side of the book.
The Linqto case is the reason to read the last column first. Its customers believed they owned pre-IPO shares; what they held were interests in series LLCs, and the company's own chief executive told the court there were "serious defects" in how those vehicles were formed and operated. The securities behind them, worth over $500m across 111 companies at filing, survived, but the route back to the customer ran through a bankruptcy plan. Before paying on any venue, three questions settle most of the risk: who is the record holder on the issuer's register, which regulated entity runs the vehicle, and whether that vehicle has its own audited accounts.
Risks worth pricing in
The discount pays for real hazards. Information is asymmetric: deals are often run without the board or recent investors, so the buyer rarely sees a current deck or fresh financials. A right of first refusal can pull the block at the last minute. Inside a forward contract or SPV the buyer owns a claim, not stock, so if the transfer is blocked or the seller defaults the usual remedy is the money back, not the gain you were underwriting. Companies can also re-read their own transfer restrictions under anti-avoidance principles and unwind a deal that looked closed. None of this shows up in the headline price, which is why diligence and structuring earn their keep here.
US resale exemptions and investor eligibility
Restricted shares are not freely transferable merely because a buyer and seller agree a price. The SEC's Rule 144 guide distinguishes securities of reporting issuers, which generally carry a six-month holding period, from those of non-reporting issuers, which generally carry a one-year period. Affiliate status, current public information and the other Rule 144 conditions still matter; the rule is a federal-law safe harbour and does not override the issuer's consent, right of first refusal or contractual transfer restrictions.
If Rule 144 is unavailable, a private resale may instead fit Securities Act section 4(a)(7). That route requires, among other conditions, an accredited purchaser, no general solicitation and reasonably current issuer information for a non-reporting company; the purchaser receives restricted securities. For natural persons, the SEC's current accredited-investor criteria include income, net-worth and specified professional-credential routes. Platform admission does not establish that a particular transfer is legally effective.
Q/A
Can a founder sell shares without company consent?
Not always. The articles, shareholders' agreement and option plan may require board consent, give the company or investors a right of first refusal, or prohibit particular transfer structures. The deal is treated as complete only after those restrictions are checked and the corporate process has closed.
Why is a secondary price below the latest funding round?
The discount compensates for illiquidity, limited information, transfer-blocking risk and different rights between share classes. The latest round may price preferred shares with protections, while the secondary buyer receives common stock or an SPV interest with fees and different economics.
Does the buyer always receive shares directly?
No. A direct transfer makes the buyer a shareholder after corporate registration, but an SPV, fund or forward may provide only an interest or contractual claim against an intermediary. That changes voting, information rights, the route to exit and the buyer's position if the structure fails.
Does platform screening replace legal due diligence?
No. A platform may match the parties and organise settlement, but it does not remove transfer restrictions, rights of first refusal, investor-eligibility rules or SPV risk. Before payment, review the seller, chain of title, company consents, intermediary contracts, fees and the refund mechanism.
Does an expected IPO guarantee an exit?
No. A listing can be delayed or cancelled, and direct shares or SPV interests may remain subject to lock-ups, company consent or manager procedures. Even after a quoted price appears, the investor may have to wait for a distribution or sell the contractual position at a discount.
Which venue charges least?
The headline rates are not comparable. Forge puts its direct-secondary fee at typically 2–4% and says it is higher inside fund and SPV structures, where the manager charges on top. Hiive's Form CRS, now filed under the Clarity name, discloses up to 5.75% from the seller and typically up to 4.85% from the buyer where a buyer commission applies (7.5% on certain private funds), but its single-asset SPVs usually carry no management fee and no carry. A tender's costs sit with the issuer running it. Compare the total over the expected holding period, including any annual fee inside a wrapper, rather than the entry commission alone.
What went wrong at Linqto, and what does it mean for a buyer on another venue?
Linqto sold pre-IPO exposure through series LLCs of its LiquidShares vehicle and filed for Chapter 11 on 8 July 2025 in the Southern District of Texas, under SEC investigation over sales to ineligible investors, title transfers and markups. The court confirmed a plan on 6 February 2026 that gives customers either a liquidating fund holding the private interests or shares in a listed closed-end fund. For a buyer elsewhere the lesson is structural: check who is the record holder, which regulated broker-dealer or adviser runs the vehicle, and whether the vehicle is audited, before comparing fees.
Which venue is most likely to actually close the trade?
An issuer-run tender, because the company has already consented — it is organising the sale. On a marketplace the block is offered subject to consent and the right of first refusal: Hiive's own 2024 disclosure records the right of first refusal firing on roughly one direct deal in six, with about a quarter of direct deals not reaching delivery and settlement taking 30 to 90 days. The trade-off is availability, since a tender exists only when the issuer opens one and invites the holder.