Venture capital secondaries are still early in Australia, but the setup is becoming difficult to ignore.
Globally, secondary transactions surged to roughly US$240 billion in 2025. Yet Australia remains a fraction of that, with annual volumes sitting somewhere between A$200 million and A$500 million.
That gap matters. Beneath the surface, there is an estimated A$12 to A$15 billion liquidity overhang building across venture portfolios. That imbalance is quietly setting the foundations for what could become a multi billion dollar ecosystem over the next decade.
For investors, this is less about hype and more about structure.
Are Venture Capital Secondaries?
At its core, venture capital is designed to be illiquid. Investors commit capital to funds with long lifecycles, often stretching beyond ten years, with returns only realised when companies exit through IPOs or acquisitions.
Secondaries change that equation. They allow existing investors to sell positions before those natural exit points, creating liquidity in what has traditionally been a locked up asset class.
There are four main ways this plays out in practice. LP secondaries involve limited partners selling fund stakes, typically at a discount to net asset value. This gives buyers exposure to more mature portfolios with shorter time horizons.
GP led secondaries are initiated by fund managers themselves, often through continuation vehicles, allowing assets to be rolled into new structures while providing optional liquidity to existing investors.
Direct venture secondaries focus on individual companies, where shares are purchased from early investors, founders or employees, often at meaningful discounts to the last funding round.
Structured equity sits somewhere in between, offering tailored liquidity solutions that balance founder outcomes with continued growth funding.
Globally, secondaries now represent a significant share of private market activity, but venture specific secondaries remain underpenetrated relative to their potential.
Why Australia Is Set Up for Growth
Australia’s venture ecosystem has matured quickly over the past decade, and that maturity is now creating pressure points.
Primary capital deployment has stabilised at around A$7 to A$8 billion annually, down from the 2021 peak, but still well above historical averages. At the same time, more than 1,000 venture backed companies are staying private for longer, as IPO markets remain inconsistent and acquisition activity has slowed.
This creates a simple problem. Capital is tied up, and liquidity pathways are limited.
Estimates suggest that between A$12 billion and A$15 billion is effectively locked within Australian venture portfolios, spanning maturing funds, early investors looking to recycle capital, and founders seeking partial liquidity without fully exiting.
Institutional dynamics add another layer. Australia’s superannuation system, now exceeding A$3.5 trillion, has relatively low exposure to domestic venture capital, but increasing interest in private markets more broadly.
Secondaries offer an attractive entry point, with shorter duration, less pronounced J curve effects, and pricing that often reflects discounts rather than premiums. That combination is starting to draw attention.
Early Market Participants Taking Shape
A small but growing group of players is beginning to build the infrastructure required for a functioning secondary market.
Firms like SecondQuarter Ventures are focused on directly addressing the liquidity gap through a mix of LP led and company level transactions. Meanwhile, Advance VC is targeting fund level exposure, allowing investors to access diversified portfolios through smaller ticket sizes.
International capital is also entering the picture. Large US and European secondary funds are increasingly sourcing Australian opportunities, attracted by a stable legal environment, transparent structures, and a growing pool of venture backed assets.
It is still early, but the direction is clear.
Structural Drivers Behind the Shift
Several forces are converging to accelerate the development of the secondary market in Australia.
Liquidity demand is the most immediate. Funds raised during the 2018 to 2021 cycle are now moving toward later stages of their lifecycle, yet exit pathways have not kept pace, creating pressure for alternative solutions.
Global capital is another factor. With more than US$300 billion in secondary focused dry powder globally, investors are actively looking for new markets, and Australia offers both diversification and relative stability.
The role of superannuation cannot be understated. As allocations to alternative assets increase, secondaries provide a more flexible way to gain exposure without committing to long dated primary funds.
At the same time, local infrastructure is improving. New platforms, better pricing discovery, and increased transaction activity are gradually reducing friction and building confidence among participants.
Pricing is also becoming more attractive. Discounts widened materially in 2025, creating more compelling entry points for buyers willing to engage in a still developing market.
How Secondaries Compare to Primary VC
The appeal of secondaries lies in their different risk and return profile. Unlike primary venture investments, which require blind commitments and long holding periods, secondaries provide visibility into underlying assets and shorter expected durations.
Pricing is typically below net asset value, rather than above it. This can improve downside protection. Returns are generally more moderate, often in the low to mid teens, but with greater predictability and less dispersion between outcomes.
The J curve effect is also reduced. Investors are entering portfolios that are already partially developed, meaning capital is deployed more efficiently and returns can be realised sooner.
For many portfolios, this creates a useful complement rather than a replacement for traditional venture exposure.
Positioning for the Opportunity
For sophisticated investors, the opportunity is less about timing the exact bottom and more about understanding the structural shift taking place.
Allocating through specialist managers offers the most straightforward entry point, particularly for those seeking diversified exposure across multiple transactions. Direct participation is also possible, although it requires deeper networks and access to deal flow.
For larger institutions, GP led transactions and continuation vehicles may provide more scale and influence, particularly when partnering with established venture managers.
Portfolio construction matters. A modest allocation to secondaries, typically in the low single digit range, can enhance diversification while maintaining exposure to higher growth segments of the private market.
Risks Still Matter
Despite the opportunity, the market is not without challenges. Pricing can be opaque, particularly in a market where transaction volumes remain relatively low and valuation marks may lag reality.
Concentration risk is also elevated. Australia’s venture ecosystem is still relatively small, meaning exposure can be skewed toward a limited number of funds and companies.
Execution risk is another factor. Intermediary capacity remains limited, and regulatory considerations can create additional complexity, particularly for institutional investors.
These risks are manageable, but they require discipline. Diversification, careful manager selection, and a focus on alignment are essential.
The Investment Case Looking Forward
The case for Australian VC secondaries ultimately comes down to one thing, liquidity. There is a growing mismatch between capital invested and capital returned, and secondaries offer a practical way to bridge that gap.
As the market matures, transaction volumes are likely to increase steadily, supported by both domestic demand and international capital flows. By the end of the decade, it is reasonable to expect annual volumes to reach A$2 billion to A$3 billion, with secondaries accounting for a meaningful share of total venture liquidity events.
For early participants, the opportunity lies in accessing discounted assets, shorter duration investments, and a segment of the market that is still in its formative stages. It is not a crowded trade yet. That may not last.
Disclaimer
The Investor Standard provides general information for education and research only. It is NOT personal advice, a recommendation, or an offer to buy/sell any security. This content has been prepared without taking into account your objectives, financial situation or needs. Past performance is not indicative of future results. Before acting on any information, consider its appropriateness and seek independent advice from a licensed financial adviser.