Secondary marketplace

What is a secondary marketplace?

A secondary marketplace is where trades of existing shares take place. Rather than a company creating new shares and selling them for the first time to buyers, the secondary marketplace participant buys and sells stock that's already held by an existing employee or investor.

So, when you think of the stock market, you're probably thinking of the secondary market. The terms secondary market and secondary marketplace are mostly the same, but secondary market generally refers to the broader concept of where existing assets trade, while a secondary marketplace is generally a more specific trading venue. Stock exchanges like the New York Stock Exchange (NYSE) and Nasdaq are secondary marketplaces for publicly traded companies.

What is a secondary marketplace for private company shares?

When you think of private company shares, or stock in pre-IPO startups, your mind probably jumps to areas like VC funding rounds and stock options. When private companies issue new shares through these channels, the participants engage in what's known as a primary market or marketplace. But that's not the only way private company shares change hands.

Existing private market shares can trade on a private secondary marketplace such as Forge, which facilitates pre-IPO investing. What was once more limited to the domain of institutional investors like private equity funds has opened up to a broader pool of participants. Through a private secondary marketplace, investors and startup employees can buy and sell securities, subject to eligibility requirements and share availability.

Secondary marketplaces have become increasingly relevant for private company stock trading, considering trends such as VC-backed companies often staying private longer. In 1980, the average age of a company that had an IPO was six years; in 2025, the average age was 12 years.¹

Secondary marketplace examples

Examples of secondary marketplaces include stock exchanges (Nasdaq, NYSE, London Stock Exchange), Over-the-Counter (OTC) markets like foreign currency exchanges, auction markets and dealer markets. Technically, even a resale site like StubHub is a secondary marketplace for event tickets, but often the term refers to financial markets.

Private company shares can not trade on public market secondary marketplaces like the NYSE, so instead there are secondary marketplaces such as Forge that are specifically designed to facilitate trades of existing private market shares, subject to eligibility requirements and share availability.

Primary vs. secondary markets: What’s the difference?

A primary market refers to a market where securities are created or offered for the first time.

The most common example of a primary offering is when a startup creates and offers preferred stock as part of a financing round. An Initial Public Offering (IPO) is another classic example of a primary market offering, which occurs much later in a company's life cycle. In that process, the private company creates and sells stock to institutional investors to become a public company. These investors, who are typically investment banks, then sell those common shares on a secondary market like the NYSE or Nasdaq.

How does a secondary marketplace for private company shares work?

A secondary marketplace for private company shares works similarly to public markets in that it brings together buyers and sellers interested in transacting shares. However, unlike public markets, private company shares are generally less liquid, may be subject to transfer restrictions and often involve longer transaction and settlement timelines. A secondary marketplace for private company shares facilitates the matching of buyers and sellers interested in transacting shares.

For example, after an employee vests and exercises stock options in a startup, they might decide to sell some of their shares pre-IPO. That way, they may realize some value now and diversify, rather than waiting for the possibility of the company going public or getting acquired. By listing through a secondary marketplace such as Forge, there is a possibility of matching with an investor who is interested in buying pre-IPO stocks.

For this type of secondary marketplace seller, there are four main steps to follow:

1. Create a free Forge account to access Forge’s next generation marketplace
2. Explore potential demand for your shares and view live market interest
3. Use proprietary pricing insights and market data to assess timing and valuation
4. Submit an indication to sell, negotiate terms, complete the transaction and receive your payment

Why do buyers and sellers use a secondary marketplace?

Secondary marketplaces help facilitate trades between buyers and sellers. Think of the public stock market. Public stock exchanges allow investors to open a brokerage app and trade stocks almost instantly, as opposed to finding a specific buyer or seller independently and then handling all the transfer logistics.

While private secondary marketplaces don't operate at the same speed as public exchanges, they provide more structure than conducting a secondary transaction independently.

If you want to buy shares of a high-growth startup or other private company, would you rather:

Contact employees at that company to see if anyone wants to sell their shares and then deal with the operational and compliance logistics of trading private shares yourself.

Or, go through a secondary marketplace that may help find a seller for you (perhaps one they already have lined up based on previously expressed interest) and handles the heavy lifting, like getting the startup to approve the secondary transaction. Secondary marketplaces like Forge also bring transparency into the private market, such as through Forge Price^TM — a derived, indicative price, calculated daily for approximately 200 pre-IPO venture-backed late-stage companies, based on synthesized data from various sources, including secondary market transactions, recent funding rounds and indications of interest on the Forge platform.

Ultimately, the centralization of a secondary marketplace can help reduce the complexity of trading private company shares.

Benefits and considerations of a private secondary marketplace

Using a private secondary marketplace offers distinct advantages, but it also requires careful evaluation. For sellers, the primary benefit is liquidity: Employees and early investors may have opportunities to realize the value of their equity without waiting for an IPO or acquisition. For buyers, these marketplaces provide access to private companies, offering a path to diversify portfolios beyond public equities.

However, there are important considerations. Private market investments are inherently speculative and carry valuation uncertainty. Also, transactions are often subject to transfer restrictions, including a company Right of First Refusal (ROFR), which can delay or block a sale. Moreover, buyers must typically meet accredited investor requirements to participate, and share availability is not guaranteed.

Are secondary marketplaces for private company shares regulated?

Generally, secondary marketplaces for private company shares are regulated entities, somewhat like how stock exchanges are regulated.

In many cases, private secondary marketplaces are broker-dealers registered with the Securities and Exchange Commission (SEC) and are members of FINRA/SIPC. The Forge marketplace entity, Forge Securities, is a registered broker-dealer.

Can anyone buy or sell private company shares in a secondary marketplace?

To buy private company shares in a secondary market, you generally have to be an accredited investor. That means you have to meet certain financial or professional requirements as set by the SEC, such as having individual income over $200,000 or joint income of over $300,000 (with spouse or partner) in each of the prior two years and reasonably expecting the same for the current year. A net worth of over $1 million (excluding primary residence) is another way to meet accredited investor requirements.

To sell private company shares, you don't have to be an accredited investor. However, private companies might have their own restrictions on whether you can sell pre-IPO shares, which most commonly include a company ROFR over any proposed sales.

Do you need a secondary marketplace or broker to trade private company shares?

While you don't legally need a secondary marketplace or broker to trade private company shares, going through a centralized marketplace can add structure to the process. You might have a hard time finding a buyer or seller on your own, let alone dealing with issues like compliance that come with this asset class.

Getting started on a private secondary marketplace 

Whether you are a shareholder looking to sell vested equity or an accredited investor exploring pre-IPO opportunities, a secondary marketplace can provide the transparency and structure needed to transact with confidence. Forge's marketplace offers proprietary pricing data, a self-directed trade experience and access to a broad network of buyers and sellers. Access to investment opportunities is subject to availability and applicable eligibility criteria. 

Create an account to explore private market data and browse available opportunities on Forge.