The rise of secondaries has been one of the private markets’ most resilient and undeniable narratives in recent years.
Consider: In the late ‘90s and early 2000s, secondaries were looked down upon, fretted about as signs of distress or sales at a discount. Today, not so. I don’t think it’s an exaggeration to say secondaries are an enduring (and growing) corner of the private markets, and an increasingly important vehicle through which VC firms drum up returns in a limited exit environment.
In Q2 2025, the VC direct secondary market in the U.S. was $61.1 billion, according to new data from PitchBook. That’s up slightly from $60 billion in Q1, and a marked jump from the $50 billion in Q4 20024, which was the first time PitchBook published a VC secondaries report. But it’s important to remember that this is still, somehow, small relative to the market—and the enormous liquidity needs of VC firms. This total Q2 secondaries market size comprises just 1.9% of total unicorn value.
“The secondary markets are a vital liquidity valve, though their influence is limited due to the high concentration of trading volume,” said Emily Zheng, senior venture capital analyst at PitchBook, via email. “Investors and employees in the highest valued, late-stage unicorns are most likely to benefit from secondaries today.”
Zheng added: “Startups can no longer ignore the value of providing employees with periodic liquidity to retain talent, and investors no longer view secondaries as a distress signal.”
In short, it’s a time where every tool counts when it comes to moving capital through private companies. Take special purpose vehicles or SPVs, separate legal entities where investors pool capital for a specific investment. If you’ve been hearing about them more, that makes good sense: The number of secondary SPVs has grown by 545% throughout the last two years, with total capital raised growing by 1,000%, according to PitchBook data. And SPVs are “here to stay,” said PitchBook’s Zheng over email.
“Venture as an asset class has always had a high barrier to entry, and SPVs have grown so much because they significantly lower these hurdles,” she wrote to Fortune. “However, transparency is of utmost importance in this opaque market. The rise of multi-layered SPVs, especially those more than twice removed from equity, may mislead green venture investors if SPV managers are not upfront about the ownership structure and total fees.”
As these strategic tools become more prominent, venture investing may be more about complex financial judgment calls than ever.
Term Sheet Podcast… This week, Evan Reiser, CEO and founder of Abnormal AI, joins the Term Sheet Podcast! We talked about his journey from a “cyber outsider” to a cybersecurity startup founder, how AI is simultaneously supercharging both cyber crime and cybersecurity, and how he imagines our future. I also sling my most honest take about whether we’re in an AI bubble. Listen here.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Venture Deals
- Aurasell, a San Francisco-based AI-powered CRM platform, raised $30 million in seed funding from N47, Menlo Ventures, and Unusual Ventures.
- Splight, a San Francisco-based grid technology company, raised $12.4 million in funding. Blue Bear Capital led the round and was joined by ZOMA Capital.
- Boost my School, a New York City-based fundraising platform for K-12 schools, raised $10 million in funding. High Alpha led the round.
- Therna Biosciences, a San Francisco-based company using AI to design new RNA medicines, raised $10 million in seed funding. AIX Ventures, Pear VC, and Fusion Fund led the round.
- Nauta, a New York-based AI logistics orchestration startup, raised $7 million in seed funding. Construct Capital and Predictive led the round, with participation from Rappi CEO Simón Borrero, RemoteHQ founder Waikit Lau, Windmar Energy CEO Juan Jose Gonzales, and Soriana.
- Sequifi, a Lehi, Utah-based payroll and HR platform for home service workers, raised $6.7 million in seed funding. Cervin Ventures led the round and was joined by Frazier Group and Tokyo Black. .
Private Equity
- Clearlake Capital Group acquired Dun & Bradstreet Holdings, a Jacksonville, Fla.-based business decisioning data and analytics platform, for $9.15 per share.
- Carousel Capital is recapitalizing Craneworks, a Birmingham, Ala.-based provider of operated crane services, crane rental services, and other related equipment rental solutions. Financial terms were not disclosed.
- FalconPoint Partners acquired SMS, a Portage, Ind.-based industrial services company. Financial terms were not disclosed.
- Maria DB, backed by K1, acquired SkySQL, a serverless database-as-a-service company. Financial terms were not disclosed.
