Accessing unicorns: Unlocking growth equity opportunities in late-stage venture capital 

Unlike traditional secondaries which acquire Limited Partner (“LP”) interests in private equity funds or Continuation Vehicles (“CV”) which move a portfolio company from a fund to a special purpose vehicle, Secondary Directs involve the direct purchase of minority shares or equity positions in private companies. These shares are typically acquired from company employees, early investors or angel investors. This direct investment structure bypasses the extra layer of the management fees and carried interest typically associated with secondary investments, offering a more cost-efficient entry point for investors.

The private market landscape has undergone a dramatic transformation in recent years, marked by the proliferation of so-called “unicorns”—private companies valued at over $1 billion. As of July 2025, Crunchbase was tracking 1,605 unicorns with a cumulative valuation of $6 trillion, nearly double the $3 trillion market capitalization of the small-cap Russell 2000 index. This surge is generally attributed to companies’ ability to scale and innovate without strong pressures to go public, where they may face additional scrutiny from regulators and Wall Street analysts. As a result, many companies are remaining private for longer.

_{Source: Sweetwater Private Equity, based on Jay Ritter’s IPO Statistics for 2024 and Earlier Years}

The opportunity set to invest in direct secondary transactions is growing, in part due to the “higher for longer” dynamics discussed above which are expanding the number and size of private companies. However, it is also causing increased sell-side demand as investors, founders and employees are having to wait nearly a decade longer on average for IPO-related liquidity than they did in 2020. With a material part of their NAV or net worth tied up in these companies’, sellers are often more willing to accept a traditional “secondary discount” to the last valuation round for their equity than they used to be. 

Industry Ventures has performed the most broad market sizing assessment, finding that the largest component of the venture secondaries market is direct transactions, which they estimate to be $74 billion in 2025. This growth is attributable to both large company-led tender offers and increasing transaction volume from private funds.

_{Source: Industry Ventures How Big Is The Secondary Market for VC (2025); PJT Secondary Investor Roadmap Series 1H25}

_{Note: Industry Ventures classifies company-led tender offers as direct secondaries}

Mercer believes the current pool of unicorns is poised to supply the next wave of companies entering the public markets during future IPO windows. We have started to observe an uptick in public offerings, particularly in the tech space (including Reddit, CoreWeave, Figma, Klarna etc.) and believe the momentum will continue, offering some unicorns the ability to publicly list some of their equity.

_{Source: Statista, S&P Capital IQ, Mercer}

Secondary Directs provide a compelling solution for investors seeking to bridge the gap between traditional private equity and direct venture capital exposure. By enabling direct participation in the growth of some of the leading private companies, these transactions have offered both costs differentiated and access to a dynamic segment of the market that is increasingly shaping the future of global capital markets.

Note: Information provided is based on Mercer’s research, views, and opinions as of September 30, 2025. The information is subject to change. This content is for informational purposes only and does not constitute investment or legal advice.