Art.1 The Secondary Market, explained.

When you buy a house, you almost never buy it from the people who built it. You buy it from the previous owner. The builder got paid years ago; today the house simply changes hands, at whatever price a willing buyer and a willing seller agree on.

Shares in private companies can work the same way. There is a "resale" market for ownership in companies that have not yet listed on a stock exchange. That resale market is called the secondary market. If you have heard about people buying shares in companies like Revolut, Anthropic or SpaceX while those companies are still private, this is usually how it happens.

It is where existing shareholders of a private company sell their shares to new investors, without the company itself raising money.

I. The one distinction that unlocks everything

There are two ways to come to own a share in a company and telling them apart is the single most useful idea in private investing.

The primary market is when the company itself sells brand new shares to raise money for its own use, whether it is to hire, build or grow. The company creates new shares and the cash goes into its bank account. This is what people mean by a "funding round."

The secondary market is when an existing shareholder: a founder, an early employee, an early investor sells shares they already own to someone else. The company creates nothing new and receives no money. Ownership simply moves from one investor's hands to another's.

Same share. Completely different transaction. In a primary deal, you are funding the company. In a secondary deal, you are buying out an earlier owner.

II. Why this market exists at all

Here is the problem the secondary market solves. A founder who started a company eight years ago, or an employee who took stock instead of a bigger salary, may be sitting on shares worth a great deal of money, on paper. But they cannot spend paper. While the company stays private, there is no stock exchange where they can simply sell.

That gap between "valuable" and "spendable" is the core issue. The technical word for the ability to turn an asset into cash quickly, without moving its price much, is liquidity. Private shares are famously illiquid.

The secondary market exists to close that gap. It gives sellers a way to access some cash before an IPO & it gives buyers a way to access companies they otherwise could never reach. One side wants liquidity; the other wants access. The market matches them.

III. This is no longer a niche corner of finance

A decade ago, buying pre-IPO shares was the preserve of a handful of insiders. That has changed sharply.

The broad private secondary market (which includes both individual company shares and stakes in private funds) crossed a symbolic threshold in 2025: for the first time, annual transaction volume passed $200 billion, reaching an estimated $225–233 billion depending on the source (Lazard, Evercore, Campbell Lutyens & Houlihan Lokey all reported records). That is roughly a doubling in two years.

The piece most relevant to pre-IPO company shares, the venture secondary market, has grown even faster as a share of activity. By 2024, secondary transactions made up close to 29% of all venture-capital deal activity, up from about 16% in 2020 (Caplight, PitchBook). The number of single-deal investment vehicles created to buy these shares grew more than fivefold in two years. In plain terms: a market that used to be a quiet backwater is now a permanent, mainstream part of how private investing works.

A word of honesty, because it matters: the headline "$225 billion" figure mostly measures large institutional fund transactions, not direct purchases of company shares. The direct pre-IPO market is a smaller (but faster) slice of that total. Anyone who tells you the whole $200 billion is "pre-IPO shares" is overselling. The real story is good enough without the exaggeration.

Definitions

• Primary market:

  When a company sells new shares to raise money for itself. The company gets the cash.

• Secondary market:

  When an existing shareholder sells their shares to another investor. The company gets nothing; ownership changes hands.

• Private / pre-IPO shares:

  Shares in a company that is not yet listed on a public stock exchange.

• Liquidity:

  How easily an asset can be turned into cash without moving its price. Public shares are highly liquid; private shares are not.

• Late-stage venture company:

  A private company that is already large and established, often years past its startup phase and possibly approaching an IPO.

• Cap table:

  Short for "capitalization table": the official record of who owns what in a company. Every secondary sale changes the cap table.

Questions that matter

Before you ever look at a price, ask three things:

1. Is this a primary or a secondary deal?

   Am I funding the company, or buying out an earlier owner?

2. Who am I actually buying from?

   A founder, an employee, an early fund?

3. Is the company itself involved, or is this purely a transaction between outside parties?

The takeaway

The secondary market is simply the resale market for shares in companies that are not yet public. It exists because great private companies create real value long before there is any easy way to cash out & it has grown from a niche into a permanent fixture of modern investing. Understanding the primary vs. secondary distinction is the foundation for everything that follows.

This series is educational and does not constitute investment advice or an offer to buy or sell any security. Private-market investments are illiquid and may result in the loss of capital. Figures cited reflect third-party sources as of early 2026 and may change.