Marketplaces for private securities, shares in companies that have yet to launch an initial public offering, are growing in relevance as more people seek out alternative assets from what is available on public markets. Today, marketplaces like EquityZen can offer investors the ability to purchase shares in well-known tech names that will probably go public at some point in the future, potentially capturing pre-IPO gains. While only available to accredited investors, smaller accredited investors are learning they can invest in private shares of popular companies, which are seeking to remain private for as long as possible due to the onerous requirements to become a reporting firm.
EquityZen acknowledges that public markets have been choppy but says private capital has been steadier. US venture funding hit $91.5 billion in Q1—up 116% year-over-year. Yes, almost half came from a single deal, OpenAI, which raised $40 billion, but flat is the new up, it seems.
EquityZen notes that secondary trading ticked up in Q1 as more companies are trading at a premium compared to the valuation at their last funding round.
“This ratio of premium to discount deals had not been seen since Q2 of 2022. While more companies traded at a premium than we’d seen in recent history, the average company traded at a 16% discount to its last round of funding. This marks a slight decrease from the 20% average discount we saw in Q4 of 2024. The increase in companies trading at either a premium or a lesser discount reflects the growth we have seen in the secondary market and investor appetite for growing technology companies.”
Fintech is the sector that has experienced the most deals trading at a premium. EquityZen shares that activity was driven by the crypto sector, as firms like Kraken and Ripple have generated more interest, probably due to the improved political environment in Washington, DC. Klarna also traded higher, as it has indicated it will soon go public.
EquityZen shared the most popular companies in Q1 2025, with 90% trading on their platform:
- SpaceX
- Perplexity
- Anduril
- OpenAI
- Ripple
- Cerebras
- Figure
- Stripe
- xAI
- Confidential Social App
Artificial intelligence and machine learning are the most in-demand industries for EquityZen investors.
The report states that while public markets have “soured,” secondary markets in privates have “stepped up” as investor interest has increased.
The VC secondary market ranges from $41.8 billion to $59.9 billion and growing.
At the same time, money on the sidelines for secondary funds has more than doubled since 2022, reaching $7.2 billion as of June 2024.
It’s not all rosy. The total number of venture deals declined by 25% in Q1 2025, as concerns over market volatility, inflation, and geopolitical worries mean investors have pumped the brakes on risk.
EquityZen closes by sharing:
“As we look back on Q1 of 2025, it’s clear that the private market, particularly the venture secondary space, is undergoing a transformation. We don’t have a crystal ball to predict what the market will look like weeks or even days from now. In the immediate term, macroeconomic headwinds will likely continue to suppress exit activity and inject caution into deal-making. Yet in spite of this, the resilience and evolution of the secondary market are creating compelling opportunities for investors. With growing investor demand for access to innovative private companies in industries like AI, fintech, and national security, coupled with rising demand for liquidity, now is a pivotal moment to follow the private markets. Secondary markets are no longer just a backdoor into startups—they’re a front-row seat to innovation, and a necessary part of a well diversified portfolio.”
