Secondary markets are platforms where employees and early investors can sell shares in private companies before a traditional exit like an IPO or acquisition, providing early liquidity for equity that might otherwise be locked up for years.
You have equity in a private company. Maybe you’ve been there five years. The company is doing well, but there’s no IPO on the horizon. Your stock options are worth something on paper, but you can’t pay rent with paper.
This is the liquidity problem.
For decades, the only answers were: wait for an IPO, wait for an acquisition, or leave and let your options expire. But a growing ecosystem of secondary markets now lets employees and early investors sell private company shares before a traditional exit.
Here’s how they work, who the major players are, and what to watch out for.
What Are Secondary Markets?
Secondary markets are platforms where existing shareholders sell their shares to new buyers, rather than the company issuing new shares.
Primary market: Company sells new shares to investors (fundraising rounds)
Secondary market: Existing shareholders sell their shares to other investors
When a startup raises a Series B, that’s a primary transaction. When an employee sells vested shares to a hedge fund, that’s a secondary transaction.
Secondary markets have existed for public stocks forever (that’s what the NYSE is). For private companies, they’re newer and more complicated.
Why Secondary Markets Matter
For employees:
- Get cash from equity without waiting years for an exit
- Diversify wealth instead of having everything tied to one company
- Exercise options without the full financial risk
- Fund life events (house, education, medical expenses)
For early investors:
- Take some chips off the table while maintaining upside
- Return capital to LPs before a full exit
- Rebalance portfolios
For buyers:
- Access high-growth private companies before IPO
- Get shares at potentially lower prices than late-stage rounds
- Build positions in companies they believe in
The catch: secondary sales almost always require company approval, and many companies restrict or prohibit them entirely.
The Major Platforms
Forge Global
What it is: The largest independent secondary marketplace for private company shares. Forge went public in 2022 and handles billions in transaction volume. (Note: Charles Schwab announced an acquisition of Forge in late 2025, expected to close in 2026.)
How it works: Forge connects sellers (employees, early investors) with accredited buyers. They handle price discovery, compliance, and settlement.
Who can use it: Generally requires $100K+ transaction minimums. Both buyers and sellers must be accredited investors.
Fees: Typically 2-4% of transaction value, varying by transaction size and complexity.
Best for: Employees at well-known unicorns with meaningful share value. Forge has the deepest buyer network for household-name startups.
Website: forgecompanies.com
EquityBee
What it is: A platform specifically designed to help employees exercise their stock options. EquityBee connects employees with investors who fund the exercise cost in exchange for a share of the upside.
How it works:
- Employee has vested options but not the cash to exercise
- EquityBee investor provides the exercise cost (and often the tax payment)
- Employee and investor split the eventual proceeds according to agreed terms
Who can use it: Employees with vested options at participating companies. No minimum transaction size (they’ve funded exercises under $10K).
Fees: No out-of-pocket fees to employees. Upon a successful exit, employees pay a 5% placement fee plus 5% of their profit. Interest also accrues on the funded amount.
Best for: Employees who want to exercise options but lack the cash, especially those facing the 90-day post-termination window. EquityBee funding can help cover both the exercise cost and estimated taxes (including potential AMT), reducing your out-of-pocket burden.
Key difference: EquityBee doesn’t buy your shares outright. They fund your exercise in exchange for profit sharing. You keep some upside.
Website: equitybee.com
Nasdaq Private Market
What it is: Nasdaq’s platform for private company liquidity events, tender offers, and secondary transactions.
How it works: Typically works with companies to run structured liquidity programs (tender offers) where employees can sell shares back to the company or to approved buyers.
Who can use it: Available when your company runs a liquidity program through Nasdaq Private Market.
Fees: Company-paid in most cases.
Best for: Larger private companies running formal tender offers. Less relevant for individual ad-hoc sales.
Website: nasdaqprivatemarket.com
Other Players
Hiive: Newer marketplace focused on pre-IPO shares. FINRA member with visible order books, operating more like a traditional stock exchange.
Zanbato: Operates ZX, an SEC-registered inter-broker trading platform for institutional trading of private company shares. Used by 220+ banks and brokers globally. Not directly accessible to individual shareholders.
EquityZen: Now owned by Morgan Stanley (acquisition completed January 2026). Connects accredited investors with shareholders looking to sell. Minimum investments range from $5K-$20K depending on investment type; seller minimum is $175K.
Republic Europe Secondary Market: (Formerly Seedrs) UK/Europe focused, allows trading of shares in Republic Europe-funded companies.
Platform Comparison
| Platform | Type | Minimum | Who Controls | Best For |
|---|---|---|---|---|
| Forge | Marketplace | ~$100K | Seller-initiated (needs company approval) | Large transactions at well-known companies |
| EquityBee | Exercise funding | None | Employee-initiated | Funding option exercises, especially near expiration |
| Nasdaq Private Market | Tender offers | Varies | Company-controlled | Structured liquidity events |
| EquityZen | Marketplace | $5K-$20K (seller: $175K) | Seller-initiated (needs company approval) | Smaller transactions, broader company coverage |
| Hiive | Marketplace | Varies | Seller-initiated (needs company approval) | Pre-IPO shares, visible order books |
The Company Approval Problem
Here’s the reality most employees don’t understand until they try to sell: your company almost certainly has to approve any secondary sale.
Most stock agreements include:
- Right of First Refusal (ROFR): Company can buy shares at the offered price before you sell to someone else
- Transfer restrictions: Outright prohibition on transfers without board approval
- Approval rights: Company must approve any new shareholders
Even if a platform wants to buy your shares, the company can block the sale. Many do.
Why companies block sales:
- Don’t want random hedge funds on the cap table
- Concerned about information leakage
- Prefer to control the shareholder base
- Want to preserve shares for future fundraising
Why companies allow sales:
- Employee retention (liquidity is a benefit)
- Attract talent who value liquidity options
- Reduce pressure for premature IPO
- Good relations with long-tenured employees
Before spending time on secondary market platforms, check your stock agreement and ask your company’s legal/finance team about their policy on secondary sales.
What Investors Look For in Cap Tables
Pricing: What to Expect
Secondary shares typically trade at a discount to the last primary round price.
Why the discount?
- Illiquidity risk: Buyer can’t easily resell if things go wrong
- Information asymmetry: Insiders know more than outside buyers
- Common vs. preferred: Employees usually hold common stock, which has fewer protections than investor preferred stock
- No investor rights: Secondary buyers often don’t get board seats, information rights, or anti-dilution protection
Typical discounts: 10-40% below last round valuation, depending on company performance, time since last round, and market conditions.
Example: Company raised at $50/share last year. Secondary buyers might offer $35-45/share for employee common stock today.
This discount can be painful, but remember: a 30% discount on actual cash beats a 0% discount on paper wealth that never materializes.
Tax Implications
Secondary sales trigger tax events. The treatment depends on what you’re selling and how long you’ve held it.
Selling shares you already own:
- Taxed as capital gains (short-term or long-term depending on holding period)
- Long-term (held >1 year): 0%, 15%, or 20% depending on income
- Short-term (held <1 year): Ordinary income rates (up to 37%)
Exercising options and selling immediately:
- NSOs: Spread at exercise taxed as ordinary income, plus any gain from exercise to sale
- ISOs: If you exercise and sell same-day (disqualifying disposition), spread is ordinary income
Using EquityBee or similar:
- Complex tax treatment depending on deal structure
- You may owe tax at exercise even though you’re sharing proceeds later
- Consult a tax professional
For a deeper dive on ISO taxation, see our complete guide to ISOs for startup employees.
When Secondary Sales Make Sense
Good candidates for secondary sales:
- You have significant paper wealth concentrated in one company
- You need liquidity for a life event
- Your options are expiring (90-day window after leaving)
- You believe the company is fairly valued or overvalued
- You want to derisk without leaving the company
Think twice if:
- You strongly believe the company will IPO soon at a higher valuation
- The discount is too steep (you’re selling $1 for $0.50)
- Your company prohibits sales and you’d damage the relationship by asking
- The tax implications would be severe
How to Approach Your Company
If you want to explore secondary sales, here’s a reasonable approach:
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Check your documents first. Read your stock agreement and any shareholder agreements. Understand what’s technically allowed.
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Ask HR or your CFO informally. “Does the company ever allow employees to sell shares on secondary markets?” Frame it as a general question, not a demand.
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Gauge the response. Some companies have formal programs. Others handle requests case-by-case. Others flatly refuse.
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If they’re open to it, ask about their preferred process. Some companies only work with specific platforms. Others require board approval for each transaction.
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Don’t go around them. Trying to sell shares without approval can violate your agreements and damage your employment relationship.
The EquityBee Alternative
If your company won’t approve a secondary sale, EquityBee offers a different path.
Instead of selling shares, you’re getting funding to exercise your options. The company isn’t gaining a new shareholder (you already own the shares after exercise). This can be easier to navigate around transfer restrictions.
The trade-off: You’re giving up a portion of your future upside in exchange for:
- Cash to exercise options you couldn’t otherwise afford
- Help covering the AMT and other taxes (reducing out-of-pocket burden)
- Not losing options when you leave (the 90-day window problem)
For employees facing option expiration without the cash to exercise, this can be the difference between keeping equity and losing it entirely.
Vesting Explained: Everything Founders Need to Know
Red Flags to Watch
On platforms:
- Pressure to transact quickly
- Unclear fee structures
- Promises of specific prices before company approval
- Requests for sensitive company information
On deals:
- Buyers asking for information you shouldn’t share
- Terms that seem too good (they rarely are)
- Complex structures you don’t fully understand
- Pressure to sign without legal review
General:
- Anyone guaranteeing outcomes
- Suggestions to hide transactions from your company
- Fees payable upfront before any sale is confirmed
Frequently Asked Questions
Can I sell my startup shares without company approval?
Almost never. Most stock agreements include transfer restrictions and rights of first refusal. Attempting to sell without approval can breach your agreements and potentially result in the company voiding the transfer. Always check your documents and get explicit approval.
How much of a discount should I expect on secondary sales?
Typically 10-40% below the last primary round valuation. The discount reflects illiquidity risk, information asymmetry, and the fact that common stock has fewer protections than preferred stock. Market conditions and company performance also affect pricing.
What’s the difference between EquityBee and Forge?
Forge is a marketplace where you sell shares outright to buyers. EquityBee funds your option exercise in exchange for a share of future proceeds—you keep some upside but give up a portion. EquityBee is particularly useful for employees who lack cash to exercise expiring options.
Do secondary sales affect my employment?
They shouldn’t directly affect your job, but relationships matter. If your company has a policy against secondary sales and you push aggressively, it could create tension. If your company offers a formal liquidity program, participating is generally fine and even encouraged.
Secondary markets have transformed the equity compensation landscape. Employees no longer have to wait a decade for an IPO to see any value from their stock options. But these markets come with complexity, discounts, and company gatekeeping. Understanding the different types of startup equity helps you know what you’re working with.
Understand your options, read your agreements, and approach your company thoughtfully. The liquidity is there if you navigate it right.
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