The market for trading shares in venture-backed companies before they go public has expanded significantly since EquityZen launched in 2013, reflecting longer private tenures for startups and growing investor appetite for liquidity. Morgan Stanley completed its acquisition of the New York-based platform in January 2026, integrating it into the investment bank’s broader private-market operations.
Phil Haslett, co-founder and chief strategy officer of EquityZen, said the secondary market now serves as a clearer indicator of true valuation than primary funding rounds, particularly as the private market becomes more bifurcated. Companies built during the 2021 funding boom—many of which were not AI-first—often trade at discounts averaging 38% below their last valuation, while newer AI-focused firms command premiums due to perceived efficiency and growth potential.
The divergence stems from structural differences. Older startups, including those from the 2021 cohort, face slower growth and strategic pivots, whereas AI infrastructure, space technology, and robotics firms benefit from generational tailwinds. Haslett cited examples like Figure AI, Project Prometheus, Redwood Materials, and Scale AI entering EquityZen’s top 20, signaling a thematic shift toward capital-intensive sectors with longer timelines to predictable revenue.
Investors are adapting to these dynamics. Secondary buyers now weigh not only equity dilution but also the availability of credit and asset-based financing, which can prioritize creditors in distressed scenarios. Haslett noted that while primary valuations reflect preferred stock terms and liquidation preferences, secondary prices offer a more immediate reflection of realizable value for employees and early shareholders.
Founders are increasingly adopting company-approved secondary programs earlier in their lifecycle, driven by talent retention needs and a competitive market for engineers and data scientists. Morgan Stanley has expanded its tender-offer activity, reflecting broader investor willingness to participate in secondary liquidity despite past hesitancy.
The IPO market remains selective, with SpaceX driving much of the recent activity. Outside of marquee names, post-IPO performance has been mixed, with some AI-related listings like Cerebras experiencing pullbacks. Haslett described current conditions as "better than three or six months ago" but cautioned that enthusiasm varies across sectors. The tech rally and strong equity markets provide a supportive backdrop, though execution risks persist for companies transitioning from private to public markets.
For investors evaluating private shares, secondary prices now serve as a critical benchmark, offering visibility into realizable value amid a landscape where traditional SaaS models face heightened scrutiny.
