Why the Venture Capital Secondary Market Is So Hot Right Now

Venture capital investing should be relatively simple: You hand money to a new company to help it grow in exchange for a stake in the business. After a few years, once it’s established and able to turn a profit, you sell your interest in an initial public offering or a buyout, yielding a multiple of your original outlay.

Recently, however, the VC business model has come under strain. It’s taking longer than in the past for startups to scale up and turn profitable. And even when they do, some founders choose to keep their business private as they find the potential valuation boost that comes with an IPO isn’t worth all the additional scrutiny required for a public listing.