Earlier entry
Take a position in a company already late in its private life — before the repricing event a public listing can bring.
Explainer
Pre-IPO secondaries, explained
A pre-IPO secondary is the purchase of an existing shareholding in a private company from a current holder — rather than from the company itself — giving the buyer a single-name position in a late-stage company before it lists on a public exchange.
Intended exclusively for professional and qualified investors within the meaning of MiFID II. Nothing on this page is an offer, an invitation, or investment advice.
Why secondaries
What a secondary can offer a disciplined buyer
Potential discount to NAV
Existing holders who need liquidity sometimes sell below the last reported value — an entry point the primary market rarely offers.
Shorter duration
A late-stage company sits closer to a liquidity event than an early-stage bet, and well past the early dip of the J-curve.
In one line. Primary = you buy new shares and the company gets the money. Secondary = you buy existing shares and a current shareholder gets the money. Pre-IPO secondaries apply this to private companies on the path to a NYSE or NASDAQ listing.
The thesis
The value is created before the listing
The strongest private companies now stay private for longer. By the time they reach the public market, much of the value has already been created — and the first chance for outside investors to buy is often the IPO itself, at a price set for the listing.
A secondary opens that window earlier. Buying an existing shareholding places an investor on the curve before the listing, rather than at it.
Entry below the last reported value is possible but never guaranteed, and a low price alone does not make a position attractive — company quality matters more.
Our approach
What we screen before a position reaches the pipeline
Every secondary position is assessed on three things before it is shown to investors. No retail noise.
Company quality
Established, revenue-generating private companies on a credible path to a NYSE or NASDAQ listing — not early-stage bets.
Seller standing
Positions sourced from genuine existing holders — employees, founders and early backers — with their standing verified.
Transferability
Clear transfer rights and clean documentation, checked before a position is offered — so settlement is not left to chance.
A closer look
How a pre-IPO secondary actually works
Primary, secondary and co-investment
Three terms get used loosely. They are not the same:
- Primary. The company issues new shares and receives the capital. Closed to most investors; priced for insiders and lead funds.
- Secondary. An existing holder — an employee, founder or fund — sells shares they already own. The company issues nothing; the seller receives the proceeds.
- Co-investment. An investor invests alongside a lead fund into a specific deal, usually by invitation.
Arco Shares operates in the second category: secondary positions in late-stage private companies, made accessible to qualified investors.
Where the entry point comes from
The strongest private companies now stay private for longer. Employees and early backers accumulate paper wealth they cannot easily convert to cash, and funds reach the end of their life while still holding good assets. Both need liquidity before a public listing arrives. That need is what creates the secondary market — and the reason positions sometimes change hands below their last reported value.
Discount to NAV
A position's net asset value (NAV) is its most recent reported worth. When a seller needs liquidity, they may accept a price below that mark — a discount to NAV. For a disciplined buyer, that discount is the entry point the public market does not offer. A discount is never guaranteed, and a low price does not by itself make a position attractive; company quality matters more.
Shorter duration and the J-curve
Committing to a private-equity fund means capital is drawn over years and returns arrive late — the so-called J-curve, where value dips before it climbs. Buying a secondary in a late-stage company starts further along that curve: the company is already mature, already valued, and closer to a liquidity event.
How this differs from PE fund secondaries
In institutional markets, "secondaries" usually means trading interests in funds:
- LP-led. A limited partner (an investor in a fund) sells its stake in that fund to another investor. The fund and its manager are unchanged; only the owner of the stake changes.
- GP-led. The general partner (the fund manager) restructures one or more assets — often into a continuation fund — so existing investors can cash out while new investors buy in and the manager keeps running the asset.
Pre-IPO company secondaries — direct positions in a single late-stage company, the focus of Arco Shares — sit alongside these as a distinct, single-name route into private markets.
Illustrative
A secondary position, step by step
A simplified, hypothetical walkthrough to show the shape of a transaction.
The company
A late-stage private company
Established, revenue-generating, widely covered, and named as a credible candidate for a future NYSE or NASDAQ listing. Not an early-stage venture bet.
The seller
An existing shareholder seeking liquidity
An early employee or backer holding shares they cannot easily convert to cash before a listing, and willing to sell ahead of it.
The position
A defined single-name holding
A specific number of existing shares, with the company profile, pricing reference against the last round or reported value, and the transfer structure documented up front.
Arco Shares' role
Sourcing, screening and settlement
We screen the company, verify the seller and the transferability, and run documentation and transfer through one regulated channel — from a €100,000 minimum.
Illustrative only. This is a simplified, hypothetical example to explain mechanics. It is not a current or past transaction, not a recommendation, and not an offer or invitation to invest.
Before you participate
The risks, stated plainly
This is high-risk investing. Pre-IPO secondaries can lose their entire value. Consider all of the following before participating.
- Illiquidity. Private positions cannot be sold on demand. You should expect to hold until a liquidity event, which may be years away or may never come.
- Listing risk. A company may delay its IPO, list at a lower valuation than expected, or never list at all.
- Valuation uncertainty. Private valuations are infrequent and based on limited information. NAV is an estimate, not a market price.
- Information asymmetry. Private companies disclose far less than public ones. Diligence reduces this risk but cannot remove it.
- Concentration. A single-name position carries company-specific risk that is not diversified away.
Past performance is not a reliable indicator of future results. Nothing here is investment advice; each investor must assess suitability independently. See our legal and risk information.
Glossary
- Secondary
- The sale of an existing shareholding from one holder to another. The company receives no new capital.
- Pre-IPO
- A private company at a stage where a future listing on a public exchange is a credible prospect.
- NAV (net asset value)
- The most recent reported value of a holding, used as a reference point for pricing.
- Discount to NAV
- A purchase price below the last reported value, often accepted by sellers who need liquidity.
- LP-led secondary
- An investor in a fund sells its fund stake to another investor.
- GP-led secondary
- A fund manager restructures assets, frequently into a continuation fund, to offer liquidity.
- Continuation fund
- A new vehicle into which a manager moves existing assets so some investors can exit and others enter.
- J-curve
- The typical early dip then later rise in the value of a private-market commitment over its life.
- Liquidity event
- An event — usually an IPO or acquisition — that lets holders convert a private position into cash.
Questions
Frequently asked
What is the difference between a primary and a secondary?
In a primary transaction you buy newly issued shares directly from the company, and the company receives the capital. In a secondary transaction you buy existing shares from a current holder, and the proceeds go to that seller rather than to the company.
What is a discount to NAV?
It is the gap between the price paid for a secondary position and the most recent reported value of that holding. Sellers who need liquidity sometimes accept a price below the last valuation, which can give the buyer a lower entry point. It is not guaranteed.
How do pre-IPO secondaries differ from private-equity fund secondaries?
PE fund secondaries trade an interest in a fund (LP-led) or restructure fund assets into a continuation vehicle (GP-led). A pre-IPO secondary is a direct, single-name position in one late-stage operating company, bought from an existing shareholder ahead of a possible public listing.
Are pre-IPO secondaries liquid?
No. These positions are private and illiquid. They cannot be sold on a public exchange, a listing may be delayed or may never happen, and you should expect to hold the position until a liquidity event.
How are the companies selected?
Each position is screened for company quality, seller standing and transferability before it reaches the pipeline. The focus is on established, revenue-generating private companies on a credible path to a NYSE or NASDAQ listing.
Who can access them, and what is the minimum?
Professional and qualified investors within the meaning of MiFID II — high net worth individuals and institutional investors — subject to onboarding and suitability checks. The minimum ticket is €100,000 per position.
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See the live pipeline
Ten active secondary positions in private companies targeting a NYSE or NASDAQ listing.
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