The Rise of Secondaries: Why They're Dominating the IPO Market in 2025
- Roee Galai
- Sep 27, 2025
- 3 min read
In recent years, the financial world has dramatically changed, especially in how companies raise capital and exit the market. By 2025, secondary markets have emerged as the leading choice, surpassing initial public offerings (IPOs) as the preferred exit strategy for many startups and growth-stage companies. This blog post will explore the reasons behind this trend, the implications for investors and companies, and what the future may hold for the IPO market.
Understanding the Shift to Secondaries
The traditional IPO process has long been seen as the best route for companies looking to go public. However, the complications and challenges associated with IPOs have led many companies to rethink their options. In 2025, secondaries have become a more appealing alternative, allowing existing shareholders to sell their stakes without undergoing the lengthy and volatile IPO process.
One main reason for this shift is the rising demand for liquidity among investors. For instance, in 2024, about 65% of venture capital firms reported that their investors were eager to pull returns from their investments sooner. Secondary markets provide a platform for these investors, enabling them to sell shares more quickly than if they waited for an IPO, which typically takes 6 to 12 months to complete.
Additionally, the increasing regulatory requirements surrounding IPOs have made the process more complex. According to a recent survey, over 70% of companies cited regulatory compliance as a significant hurdle in their IPO plans. In contrast, secondary transactions often involve fewer regulations, making them more attractive for many companies.
The Role of Technology in Facilitating Secondaries
Recent advancements in technology have greatly contributed to the rise of secondaries. Various online platforms and marketplaces have emerged, allowing investors to buy and sell shares easily. For example, platforms like EquityZen and Forge Global have facilitated thousands of secondary transactions, providing broader access to secondary markets for investors of all sizes.
These platforms have also improved the transparency and efficiency of transactions. Investors can now access real-time data and analytics to help them make better decisions about buying or selling shares. According to a report by McKinsey, 77% of investors using such platforms believe they have better insights, which has fueled the growing interest in secondaries.
The Impact on Startups and Growth Companies
For startups and growth companies, the rise of secondaries presents both new opportunities and challenges. On the positive side, secondaries allow these companies to offer liquidity to early investors and employees, which can improve talent retention. For example, companies such as Robinhood have leveraged secondary sales to allow employees to cash out part of their equity, helping to keep their workforce motivated and engaged.
However, this shift towards secondaries may change fundraising dynamics. As companies increasingly rely on secondary markets for liquidity, attracting new investors looking for the growth potential of an IPO might become more difficult. This change could result in a more cautious approach to fundraising. Growth companies may need to carefully assess the balance between providing liquidity and securing future capital investments.
Investor Perspectives on Secondaries
From an investor perspective, the rise of secondaries presents new opportunities for diversification and risk management. Investors can now access a broader range of companies and sectors, enhancing their portfolios. For example, a recent report indicated that investors who participated in secondary transactions saw a 20% increase in returns compared to traditional equity investments.
Nevertheless, this shift also raises concerns about valuations and pricing. In the secondary market, share prices often fluctuate based on supply and demand, which might not reflect the company's true value. Investors must conduct thorough research and analysis to ensure they make informed decisions.
Looking Ahead for IPOs
While secondaries have gained significant traction, it is important to note that IPOs are not disappearing. Many companies still see going public as a crucial milestone. A 2025 survey found that about 45% of surveyed firms still regard an IPO as their best way to raise capital and enhance their brand visibility. However, the market landscape is evolving, and companies must carefully consider their options.
As the financial environment continues to change, we could see a hybrid approach where companies utilize both secondaries and IPOs strategically. This could create a balanced ecosystem, allowing companies to choose the best path for their unique goals and circumstances.
Final Thoughts
The rise of secondaries in 2025 signals a major shift in the financial landscape as companies turn to these markets for liquidity and exit strategies. With the help of technology and evolving investor preferences, secondaries have emerged as a viable alternative to traditional IPOs.
As the market continues to evolve, it is essential for both companies and investors to adapt to this new reality. Understanding the dynamics of secondary markets will be important for navigating future investment strategies. Regardless of whether companies pursue secondaries or IPOs, their ultimate goal remains the same: to create value and drive growth in an ever-changing economic environment.
