Private company secondary markets

What it is

Private company secondary markets are venues where founders, employees, and early-stage investors sell existing shares in still-private startups to outside buyers, typically before an initial public offering or acquisition. Unlike primary fundraising rounds, where a company issues new shares and receives the proceeds, a secondary transaction transfers equity between two parties and leaves the company's cash position unchanged.

Buyers are almost exclusively US accredited investors and qualified institutional buyers. Transactions rely on exemptions from US Securities and Exchange Commission registration requirements, principally Regulation D (Rule 506), Regulation S for offshore buyers, and the Section 4(a)(1½) resale doctrine. The SEC maintains a dedicated guidance page on private secondary markets. The dominant platforms as of mid-2026 are Forge Global (ticker FRGE, listed on Nasdaq since March 2022, formed by the 2018 merger of SharesPost and Forge) and Nasdaq Private Market (NPM, spun out of Nasdaq Inc. in 2021 with initial backing from Goldman Sachs, Citigroup, Morgan Stanley, and SVB, and a US$62.4 million follow-on round in February 2024 from UBS, Wells Fargo, BNP Paribas, and DRW Holdings). EquityZen and Hiive address smaller deal sizes. Carta's CartaX exchange, launched in January 2021, was shut down in January 2024 after its brokerage unit used confidential cap-table data to solicit buyers without company authorisation; Carta sold the brokerage business to Public in August 2024.

History

SecondMarket (founded 2004, later acquired by Nasdaq) and SharesPost (founded 2009) pioneered institutional trading of private shares during the pre-IPO years of Facebook and Twitter. Secondary activity grew fast enough that regulators took notice: the SEC flagged concerns that widely traded private companies were functioning as de-facto public companies without disclosure obligations. Congress responded with the JOBS Act of 2012, lifting the SEC Section 12(g) shareholder-registration threshold from 500 to 2,000 holders, giving companies more room to delay going public. That change deepened the secondary market by removing an incentive to rush to IPO.

Current state

Forge Global recorded US$756 million in trading volume in the second quarter of 2025, up 9% year over year, and US$52.7 million in first-half 2025 revenue, up 28%. The private market it tracks was valued at roughly US$4.1 trillion as of the third quarter of 2025. On NPM, closed secondary trades totalled US$673 million in 2025, more than double the US$372 million recorded in 2024; the number of private companies permitting direct secondary transfers on the platform rose from 12 issuers in 2024 to 31 in 2025.

The largest individual secondary exercises as of mid-2026 are employee tender offers at high-profile AI companies. OpenAI's 2026 employee tender, tied to a notional valuation near US$850 billion, is among the largest single secondary exercises on record. These structured tenders differ from open-market trading: the company or a designated broker matches employee sellers with curated outside buyers over a fixed window, and shares are repriced at the cleared tender price rather than a negotiated bilateral level.

The SEC's Spring 2025 regulatory agenda flagged a forthcoming reproposal of changes to Rule 144, the safe-harbour covering resale of restricted securities after a company lists, which would affect the post-IPO liquidity timelines for investors who bought in the secondary market before an offering.

Relationships

Secondary-market pricing feeds directly into primary round negotiations: a company trading on Forge at a material discount to its last primary round valuation signals pressure on the next primary raise. Secondary volumes also track tech IPO cycles, rising when public-market appetite is strong and contracting when windows close. During the 2022 to 2023 rate-shock period, many unicorns saw secondary bids fall 40 to 60 percent below stated book valuations. M&A exits can trigger demand spikes when acquirers run pre-close tender offers to consolidate the cap table before signing.

What to watch

Whether Forge Global reaches adjusted EBITDA breakeven in 2026 as it has targeted, the first test of whether a standalone secondary exchange is self-sustaining. Any SEC rulemaking under the Spring 2025 agenda that revisits accredited-investor thresholds or Rule 144 conditions, which could widen the eligible buyer pool and compress holding-period friction. The size and cadence of AI-company tender offers after US: OpenAI leans toward a 2027 IPO and an employee tender near US$850bn as Altman holds out for US$1tn, which have been repricing the sector; and whether NPM or a new entrant sustains quarterly volumes above US$200 million without a concentrated cluster of marquee names driving the numbers.