Secondary Markets Surge as Tech Startups Bypass Traditional IPOs
Secondary markets have surged to $240 billion as tech startups bypass traditional IPOs. Hamilton Lane managing partner Keith Brittain details Israel investments and liquidity trends.
Secondary transactions have become a vital mechanism for tech ecosystems, offering liquidity to employees and founders without the need for traditional public offerings. Amid a prolonged freeze in IPO markets and shifting economic landscapes, specialized secondary funds are stepping in to acquire private shares.
Keith Brittain, managing partner for secondary investments at Hamilton Lane—a global investment giant managing roughly $1 trillion in assets—recently discussed the market's explosive growth in an exclusive interview. According to Brittain, the secondary market has expanded from roughly $10 billion in 2010 to approximately $240 billion today.
Expanding Activity in Israel
Hamilton Lane has maintained a presence in Israel for over two decades. Over the past three years alone, the firm has deployed approximately $470 million in the country, bringing its total local investments to roughly $1.5 billion across various asset classes.
In the secondary sector, Hamilton Lane structured a liquidity solution for Vgames, a venture capital fund, and participated in general-partner-led transactions providing exposure to Israeli unicorns such as Wiz, Panthera, and CyberArk prior to its public debut.
Valuation and Market Dynamics
When evaluating private companies, Hamilton Lane applies rigorous due diligence, analyzing business models, financial metrics, and comparable market data rather than relying solely on peak valuations from previous funding cycles.
"We say no to more than 90% of deals, and sometimes 98%," Brittain noted, emphasizing that deep discounts alone do not guarantee strong returns. The firm focuses on asset quality and the long-term potential of the underlying business.
The Shift Away from Traditional IPOs
While market observers frequently anticipate a resurgence in public listings, Brittain suggests that structural shifts are altering exit strategies. Many private companies increasingly prefer to remain private, utilizing secondary markets to reward employees and early investors while avoiding the extensive regulatory burdens and reporting requirements associated with public markets.
