Serial technology entrepreneur with 10+ years of experience building scalable tech ventures; leading product and development teams, selling to and co-developing products with Fortune 100 customers, raising capital from global professional investors.
In the volatile world of startups, where success and failure often hang in a precarious balance, the ability to adapt and make strategic decisions is crucial. As the landscape evolves, companies face various challenges that require innovative solutions. One challenge that has gained prominence in 2023 is the debate surrounding startups selling secondary shares - especially after experiencing decreases in valuations.
While the valuation surge experienced by OpenAI is notable, it is important to contextualize this example within the wider landscape of secondary market activity in 2023. The market has seen several VC funds actively participating in the buying of secondary shares, aiming to capitalize on the potential growth of these unicorn companies.
Flexport secondary prices were a source of negative signal in this year when the secondaries were circulating on several marketplaces with around a 50% discount at approx. $4 billion, down from its latest round’s valuation which was $8 billion.
Conclusion: Secondaries Are Here To Stay, Unlocking Liquidity, Trajectory Signals And New Investor Audiences For Late Stage Companies The lack of liquidity seems to be an ongoing theme among all stages of VC investors - the lack of M&A activities, decreased valuations accompanied by down rounds in 2023 and waves of layoffs have pushed them to seek alternative solutions. The delayed IPO market has also forced early team members and employees who counted on liquidity - to shop around, often settling on secondary platforms as the most convenient option.
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