Secondaries
Buying an existing stake in a startup or fund from a current holder, rather than investing new capital directly into the company or fund.
A secondary transaction transfers an already-existing stake — in a company or in a fund — from one holder to another, rather than the company or fund issuing new shares. Early employees or investors sell secondaries when they want liquidity before an IPO or acquisition; a secondaries fund provides that liquidity by buying at a (usually discounted) price against the last known valuation.
The category spans direct secondaries (buying shares directly in a startup from an early holder) and LP-stake secondaries (buying an LP's position in a venture fund itself, before the fund has fully returned capital) — both solve the same underlying problem: venture is illiquid for a decade or more, and secondaries are the release valve.
Why it matters
As an LP facing a decade-long lockup, knowing a secondaries market exists — even if you never use it — is a relevant part of understanding your liquidity options. Read a full breakdown at Secondaries Explained.