Exit Can Wait: Secondaries Are Tech’s New Alternative
High-quality companies are stuck without exits, the IPO market remains sluggish, and capital is looking for a way out – creating a new opportunity for investors.
The global technology market, including Israel’s tech ecosystem, is in a paradoxical phase. On one hand, more companies are delivering strong performance – increasing their valuations, improving efficiency, and even reaching profitability. On the other hand, just as these companies are more mature than ever, they are struggling to generate liquidity.
The reason lies in timing. The IPO market has yet to fully recover, while mergers and acquisitions continue to take place only selectively. The result is a new “valley of death” for growth-stage companies – they are no longer early-stage startups, yet they are unable to reach the next milestone of an IPO or acquisition.
This is not the same crisis we saw in 2021. Back then, many companies traded at inflated valuations without solid business fundamentals. Today, the picture is very different: valuation multiples are more realistic, companies are more efficient, and teams are leaner and more focused. These are fundamentally strong businesses, but the macroeconomic environment – high interest rates, global uncertainty, and volatile capital markets – is delaying their path to liquidity.
Ironically, this is where an attractive investment opportunity emerges. When companies are not eager to raise additional capital – especially those that have already reached profitability – existing shareholders, employees, early angel investors, and mature venture funds often seek partial liquidity. This is where the secondary market comes into play.
Secondary investments allow investors to purchase existing shares from current shareholders, providing liquidity without requiring the company to raise additional capital. It is a win-win model: shareholders gain access to liquidity, investors gain exposure to high-quality companies at later stages of growth, and in many cases the company itself benefits from greater stability, a healthier shareholder base, and a cleaner cap table.
What was once viewed as a niche solution for an employee looking to monetize equity or a venture fund seeking an exit is gradually becoming a core pillar of the private market. According to J.P. Morgan, the global private secondary market reached $226 billion in transaction volume in 2025 – a sharp increase from the previous year. Major financial institutions now view secondary investing as a strategic asset class rather than a niche solution.
The same trend is increasingly visible in Israel. Capital has returned to the market, but it is flowing into fewer deals, stronger companies, and with far greater selectivity. Investors are no longer rewarding ambition alone – they are rewarding execution. Within this environment, Israel stands out for its abundance of high-quality companies with deep technology and exceptional talent, alongside a significant shortage of liquidity. That combination makes the Israeli market particularly fertile ground for secondary investments.
That said, not every secondary transaction is a good one. The key question is not simply the size of the discount, but the quality of the company, the seller’s motivation, the rights attached to the shares, and whether the transaction strengthens the company or merely solves a short-term liquidity problem. A mature secondary market requires expertise, selectivity, and the ability to distinguish between value creation and value destruction.
In a world where easy money has disappeared, liquidity has become one of the most valuable assets. If startups once prioritized growth first and exits later, a new order is emerging: liquidity first – exit later.
Ultimately, the market is not facing a crisis of quality, but a crisis of timing and liquidity. For investors who recognize this shift, it may represent one of the most compelling opportunities of recent years.
