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So why are there not more ‘market makers’ on these online platforms for selling and buying secondaries? Feels like a perfect opportunity for a VC firm to set up a couple desks that actually do deeper diligence and trade these. Are there any banks / firms that have started to build these out?

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Good question. I think the issue is that:

1. There are 20 or so businesses that are actively traded (think SpaceX, OpenAI, Databricks, Stripe, etc.). The market for shares in these companies is deep and liquid.

2. Everything else you don't have the information access to really price things effectively without building deep, strong relationships and reassuring the founders that you're long-term investors who aren't there to flip shares in their company. You won't be able to do that for long if you proceed to do the exact opposite of what you've promised

A lot of late-stage private companies are private precisely because they don't want to be public. They want to control the secondary market for their shares, information flow, share price, everything. No incentive for a private secondary market to exist from a founder perspective, and they usually put controls in shareholders agreements that mean it will be very difficult to build one.

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Interesting - thanks for this. Seems like a fundamental block to progress in these ‘public’ secondary markets? Really loved this article so any more content you can put out on how founders could be better incentivized to allow secondary transactions (e.g. current investors get a % transaction fee of each new secondary purchase) or any of the other blockers to progress in this would be v welcomed!!

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