Key Takeaways
- • Quentin Dupraz, GP at Ilavska Vuillermoz Capital, says the secondary market, which reached a record $240bn in 2025, is now an integral part of early-stage fund managers' exit strategies, as holding periods lengthen and exits concentrate in AI, defence and space.
- • Continuation funds now account for nearly half of the secondary market and trade very close to NAV, according to Dupraz, who advises an independent price set by a third party and a genuine exit option for existing LPs.
- • Luxembourg already offers the Raif, SCSp, external AIFM structures and a legal toolkit recognised by international buyers, but needs credible independent valuation providers and local market-making for small transactions.
- • Dupraz argues secondary and primary markets are complementary: a liquid secondary market makes LPs more willing to commit for ten years, while the secondary market itself depends on primary funds to create assets to buy.
- • 9fin, after its $170m Series C round, ran its first employee secondary sale at the same valuation as the round, allowing staff to realise part of their equity while remaining with the company.
Summary
In an interview with Paperjam, Quentin Dupraz, a general partner at Ilavska Vuillermoz Capital, described the growth of the secondary market as a significant development for the private equity and venture capital ecosystem. He said the market reached a record $240bn in 2025 and comprises three segments: fund units sold by LPs, continuation funds initiated by GPs, and direct sales of company shares. Dupraz attributed the trend to lengthening holding periods and more concentrated exits, particularly in AI, defence and space.
Dupraz said that for an early-stage fund, a secondary transaction can allow an LP to obtain liquidity without affecting the portfolio, since the GP retains its mandate and the buyer takes over the stake. He said the GP's role is to prepare the vehicle through a clear LPA, sound transfer clauses, a defensible valuation and identified buyers, and that LPs now assess this during due diligence. He also noted that direct sales deliver distributions to paid-in capital (DPI), which he described as the key metric for raising the next fund. For entrepreneurs, he cautioned that secondary sales support alignment and retention only when used in moderation.
Dupraz cited 9fin, the company he is associated with, which after a $170m Series C round organised its first employee secondary sale at the same valuation as the round. On continuation funds, he said they fit early-stage funds because late-stage assets often outlast the fund's ten-year life. He warned against recycling carried interest or stacking fees across the initial fund and the continuation vehicle, and said the LP exiting and the one joining should be treated with equal rigour.
On Luxembourg, Dupraz said the jurisdiction already has the infrastructure for secondary transactions, and that major secondary funds domicile vehicles there, allowing transfers to be processed in weeks rather than months. He identified two gaps: credible independent valuation providers for fund units and illiquid venture stakes, and market-making for small transactions, which he said London and New York intermediaries typically do not handle. Finally, Dupraz argued that the two markets are complementary, since the secondary market buys existing interests and does not finance growth, while competition mainly occurs in allocation decisions.
Dupraz said that for an early-stage fund, a secondary transaction can allow an LP to obtain liquidity without affecting the portfolio, since the GP retains its mandate and the buyer takes over the stake. He said the GP's role is to prepare the vehicle through a clear LPA, sound transfer clauses, a defensible valuation and identified buyers, and that LPs now assess this during due diligence. He also noted that direct sales deliver distributions to paid-in capital (DPI), which he described as the key metric for raising the next fund. For entrepreneurs, he cautioned that secondary sales support alignment and retention only when used in moderation.
Dupraz cited 9fin, the company he is associated with, which after a $170m Series C round organised its first employee secondary sale at the same valuation as the round. On continuation funds, he said they fit early-stage funds because late-stage assets often outlast the fund's ten-year life. He warned against recycling carried interest or stacking fees across the initial fund and the continuation vehicle, and said the LP exiting and the one joining should be treated with equal rigour.
On Luxembourg, Dupraz said the jurisdiction already has the infrastructure for secondary transactions, and that major secondary funds domicile vehicles there, allowing transfers to be processed in weeks rather than months. He identified two gaps: credible independent valuation providers for fund units and illiquid venture stakes, and market-making for small transactions, which he said London and New York intermediaries typically do not handle. Finally, Dupraz argued that the two markets are complementary, since the secondary market buys existing interests and does not finance growth, while competition mainly occurs in allocation decisions.
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