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As Alberto says: “Everything is relationship. First, we build trust. Then we do business.”
Direct secondaries are a powerful way to recycle capital, reward early believers, and keep the innovation engine humming. If you’re an investor, founder, or just startup-curious and interested in the Secondaries Market, this masterclass is the one to watch.
What Are Secondaries - And Why Should You Care?
Let’s talk about secondaries: a key mechanism in venture capital that’s becoming increasingly relevant.
Alberto Chalon, entrepreneur-turned-investor and General Partner at Giano Capital, recently offered deep insights into how and why secondaries are reshaping the investment landscape.
Secondary transactions involve the sale of existing shares in a private company: typically by early investors, founders, or employees, to a new investor. Unlike primary funding, which injects fresh capital into a business, secondaries shift ownership without changing the company’s cash position. It’s a way to create liquidity in an increasingly illiquid private market.
On the masterclass, the three types of secondaries were discussed:
GP-led secondaries: A fund manager (GP) rolls existing assets into a new vehicle for continued ownership and liquidity for current LPs.
LP-led secondaries: Limited Partners sell their positions in a fund to other investors, often due to liquidity needs or strategic reallocation.
Direct secondaries: Buyers acquire shares directly from individuals, founders, employees, or early investors within a specific company.
💡 The masterclass focuses on Direct Secondaries, including what’s happening in Europe right now and how to differentiate yourself as a buyer and seller. If you’re not a subscriber, join our community to watch the full masterclass and access the resources.
Why Are Secondaries So Relevant Now?
The path to liquidity for private companies has become significantly longer. Where an IPO might once have occurred in 6-8 years, we’re now seeing timeframes stretch to 14-15 years. The abundance of private capital and changing investor preferences means companies are staying private longer, and early stakeholders are left waiting.
Secondaries offer a solution:
Founders and employees can access life-changing liquidity without needing a full exit.
Early investors can show returns (DPI) to support their next fundraise.
New investors can enter promising companies at later stages, where operational risk is lower and growth trajectories are clearer.
The masterclass explores how this dynamic is playing out today and why it’s not a temporary trend but the new normal.
Understanding the European Context
While secondaries are a well-established market in the U.S., the European landscape is catching up- but with some key differences:
Data transparency is limited. Unlike in the U.S., European companies aren't required to disclose cap table changes, making it harder to identify opportunities without founder cooperation.
Cultural differences matter. European founders and boards often take a more cautious, relationship-based approach. Cold outreach or speculative offers rarely succeed.
To be effective in Europe, secondary transactions require:
Strong founder relationships
Mutual alignment on goals and values
Respect for confidentiality and process
In the session, Alberto shared how he personally navigates these complexities- sometimes even flying out to meet founders face-to-face when trust is on the line.
Who Sells, and Why?
Sellers in secondary deals generally fall into a few categories:
Founders or employees seeking personal liquidity (e.g. home purchase, education, new venture)
Business angels or early-stage investors looking to recycle capital into new opportunities
VCs nearing fund maturity who need to return capital to LPs
In each case, secondaries enable participants to rebalance risk, diversify exposure, or fund new ambitions without forcing a company into a premature exit.
This was a key part of the conversation: how secondary liquidity can be a strategic tool for individuals and institutions alike.
Key Takeaways for Investors
Alberto emphasized that successful secondary investing depends on disciplined, respectful execution:
Due diligence is non-negotiable. Without cooperation from the company, it’s nearly impossible to price and assess the opportunity properly.
Growth -not discount- is where the value lies. Long-term investors should focus on healthy companies with solid fundamentals, rather than chasing cut-rate deals.
Transparency builds trust. Sharing return expectations and valuation rationale helps align buyer and seller and supports a more sustainable ecosystem.
The masterclass included a step-by-step walkthrough of how to structure and price a deal using a 3x return framework and how to handle valuation conversations with sellers.
Why Secondaries Support the Ecosystem
Beyond individual returns, secondary deals play a vital social and structural role. They help:
Empower former employees to become founders
Inject capital back into early-stage investing
Prevent “stuck” cap tables that discourage new participation
Extend the lifecycle and impact of successful entrepreneurial talent
This is about more than liquidity. It’s about momentum. As Alberto pointed out, Europe’s startup ecosystem stands to gain significantly if secondaries become more widely understood, accessible, and embraced.
All of this and more was covered in detail during the session, including examples of how secondaries have helped fuel startup ecosystems from PayPal to Revolut.
This article gives you the perfect primer to watch the full masterclass with Alberto Chalon - exclusively available to paid community members. You already know the benefits: clear-eyed insights, tactical advice, and access to conversations that don’t happen anywhere else.
If you’re not yet a member, this is your cue.
Resources
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