Early startup investors are looking to exit in a tight market. Enter the specialists.

The surge in such deals, called secondary portfolio sales, is driven by early-stage domestic funds nearing the end of their lifecycles. As they need to return money to limited partners or investors and raise new funds, it’s pushing them to explore alternative exit routes.

This has drawn global secondaries specialists such as TR Capital, TPG NewQuest, Pantheon Ventures, Glendower (CVC), LGT Capital, and HarbourVest, which are actively scouting such deals in India, according to people familiar with the matter.

“India’s secondaries market has seen strong activity over the past 18 months, driven by supportive economic policies and buoyant capital markets," Paul Robine, founder and chief executive officer of TR Capital, told Mint. Last week, TR Capital acquired Eight Roads Ventures’ stake in three portfolio companies in a $50 million transaction. Robine confirmed that the firm is actively looking for more such transactions in India.

Early investors often exit during larger late-stage funding or ahead of initial public offerings (IPOs) when private equity firms enter. These rounds typically involve a mix of new stock and the sale of existing shares. However, such funding remains tight as investors and founders continue to disagree on valuations in the private market. Exits through IPOs also remain uncertain amid global volatility.

As a result, investor-to-investor secondary deals are gaining momentum as venture capital firms, especially the ones that raised capital in the 2013-14 period, approach the end of their fund lifecycle.

A spike in secondary deals in India mirrors the trend across Asia-Pacific. Secondary sales were the largest exit channel by value in APAC in 2024, rising 33% year-on-year to $39 billion, according to an April report by Bain & Co. A separate report by the firm in May said India’s exit momentum will likely remain strong, with more funds offloading aging assets amid valuation corrections in public markets.

Secondary rush

“Several VC and PE funds that were set up a decade ago are now approaching the end of their fund life," Nitin Agarwal, head of private equity at Neo, told Mint. “There’s growing pressure from LPs to deliver DPI (distributions to paid-in capital), especially as IPOs remain selective and not everyone can exit through public markets."

NeoWealth Management is also raising a secondaries fund under its private equity arm. Agarwal, however, declined to share further details. Agarwal, who previously led TPG NewQuest’s India operations, is among a group of senior investors launching their own secondaries-focused platforms. Piyush Gupta, who was earlier with Peak XV, is building Kenro Capital.

In February, 360 ONE Asset Management closed a dedicated secondaries fund at around $600 million, according to VCCircle. In May, Bengaluru-based investment bank IndigoEdge and entrepreneur Hitesh Ahuja launched PixelSky Capital, targeting ₹400 crore.

“Since a few secondaries have been successful and lots of PE investments are nearing the end of fund cycles, it’s a good time to raise capital specifically for secondaries in India," said Pranav Atit, partner at Trilegal. New specialist entrants will help deepen India’s private market ecosystem and improve capital recycling, he said.

These transactions can either be single-asset deals, where an investor acquires an early investor's stake in one company, or multi-asset portfolio transactions involving ownership in several firms. Last year, Chiratae Ventures sold stakes in Lenskart, Bizongo, and Rentomojo to Madison India Capital for $70 million. Earlier this month, TR Capital closed its deal for stakes in MoEngage, Whatfix, and Shadowfax, part of its Eight Roads portfolio purchase.

There are also secondary sales by limited partners or investors who pool in capital but are not involved in managing a fund. General partners or fund managers also set up continuation funds through secondary deals–this involves rolling one or more companies into a new vehicle to extend holding periods while returning money to the previous fund’s limited partners.

In April, ChrysCapital closed a $700 million GP-led continuation fund, backed by HarbourVest and LGT Capital, involving its stake in the National Stock Exchange. It’s one of the largest such transactions in India to date.

Lower risk, shorter timelines

Secondaries are less risky because investors enter late-stage companies with established governance, proven performance, and visible exit timelines–more often than not at a discount of the fair market value, according to Agarwal.

“You’re coming in at a much later stage, often giving an exit to one or more existing investors in a company that has already established governance practices, typically enforced by the fund that backed it," he said. “In many cases, you’re buying into a business that’s either profitable or on a clear path to profitability."

Secondary funds typically operate with shorter timelines, three to five years, and specialize in underwriting exits across diverse assets, said Agarwal. “So when they’re evaluating a deal, the most important lens is: Can I exit in the next 3–5 years, either through a public market listing or by selling to another private equity fund?"

As no new capital is coming in, startups do not prioritze such funding. “So secondary funds must be able to run diligence independently, often from the outside," said Agarwal.

Over the past decade, secondaries were seen triggered by delays in IPOs, making them feel like a fallback option rather than planned liquidity events and were not publicised.

Indian venture capitalists unlocked $1.14 billion in 2023 and $1.07 billion in 2024 through secondary sales, according to data shared by Venture Intelligence. 2025 has already seen $406 million across 15 transactions, with every transaction including at least 50% of a secondary component.

“Today, secondaries are becoming more mainstream and accepted," said Agarwal. “In almost every private equity deal involving primary capital, you’ll see some existing investors quietly exiting on the side."

However, such standalone rounds purely for liquidity remain rare. Atit of Trilegal said, “Globally, they have been a well-established part of the private investment market, and India’s market is now embracing this trend."