Jared Carmel, a pivotal figure in the evolution of venture capital, and his firm, Manhattan Venture Partners (MVP), have spent over a decade meticulously constructing the institutional framework for what has become a foundational shift in the U.S. venture ecosystem: the ascendance of the secondary market. This market, once a niche corner, is now recognized as a core component in how the industry finances and sustains long-lived, high-growth American companies. This development reflects a profound adaptation within venture capital, enabling innovative enterprises to pursue ambitious, multi-decade journeys without the premature pressures of a public listing.
A Vision Forged in Cycles: The Dot-Com Bust and Early Insights
Carmel’s career began in an exceptionally challenging economic climate, graduating into the twilight of the dot-com bust just weeks before the seismic events of September 11, 2001. This initial exposure to market volatility instilled a crucial understanding: markets operate in discernible cycles, and patterns, though often forgotten, inevitably repeat. He observed how sectors once dismissed, such as SPACs, telecom infrastructure, and clean technology, would eventually resurface and regain prominence, underscoring the cyclical nature of investment trends and technological adoption. This early lesson in market resilience and the ebb and flow of investor sentiment proved foundational to his later insights.
A significant turning point arrived in late 2009. The burgeoning social media giant Facebook, still a private entity, presented an unforeseen opportunity. A friend, an early employee, was leaving the company to get married and sought to monetize a portion of his shares. Carmel, recognizing the potential, acquired these shares at a modest valuation of a few dollars apiece. While he readily admits to no longer holding those particular shares – a decision he now reflects on with humor – the transaction itself was revelatory. "This was before the secondary markets were even a market. Before people knew it existed," Carmel recalls, highlighting the nascent stage of what would become a sophisticated financial instrument. This seemingly simple transaction illuminated a profound unmet need within the private capital landscape: a mechanism for early employees and investors to achieve liquidity without necessitating a company’s premature public offering.
From this pivotal moment, Carmel began to actively facilitate liquidity for early employees across a spectrum of high-profile private companies, including Facebook, Twitter, and Palantir. This hands-on experience in the nascent secondary market led him to eventually join G Squared, a prominent growth equity firm. However, his vision extended further. In 2014, he co-founded Manhattan Venture Partners (MVP) with a clear conviction: the secondary market needed to be institutionalized. His belief was that it required the same rigorous diligence, discipline, and underwriting standards typically applied by established primary venture firms. This commitment to professionalization would be instrumental in legitimizing secondaries and integrating them into the broader venture capital ecosystem.
From Niche to Pillar: Institutionalizing the Secondary Market
Historically, secondary transactions in venture capital were often viewed with skepticism, frequently associated with distressed assets or desperate sellers. They lacked transparency, standardization, and the robust due diligence processes characteristic of primary investments. This perception began to shift in the late 2000s and early 2010s, catalyzed by the prolonged private lifespans of highly successful tech companies. As companies like Facebook, Uber, and Airbnb remained private for extended periods, their early employees and investors found themselves holding illiquid, albeit highly valuable, equity. The need for a structured, reputable marketplace became undeniable.
MVP’s founding in 2014 marked a significant step in this institutionalization process. The firm committed to bringing institutional-grade processes to secondary transactions, focusing on meticulous financial analysis, legal due diligence, and a deep understanding of the underlying companies. This approach helped to build trust and attract sophisticated institutional investors to the secondary market. By establishing clear valuation methodologies and transparent transaction processes, MVP, alongside other pioneering firms, transformed secondaries from an opportunistic, often opaque activity into a recognized and respected asset class.
The growth of the secondary market over the past decade is stark evidence of this institutionalization. According to data from industry trackers like Preqin and PitchBook, global private equity secondary transaction volume has surged dramatically. In 2010, the market was estimated to be around $20-30 billion; by 2023, it consistently hovered around $100-130 billion annually, with dedicated secondary funds raising record amounts of capital. This exponential growth underscores the market’s maturation and its acceptance by limited partners (LPs) and general partners (GPs) alike as a vital component of their investment strategies. This shift has not only provided liquidity but also introduced new dynamics into portfolio management, enabling LPs to rebalance portfolios, manage vintage year exposures, and access attractive assets that might otherwise be unavailable.
The Evolving Landscape of Venture: Longer Journeys, Deeper Capital
The American venture industry has undergone a quiet yet profound evolution over the last decade, adapting to a new reality: the companies founders are now building demand significantly longer maturation periods. It is no longer uncommon for some of today’s largest private companies to exist as private entities for twenty years or more. This extended timeline is not, in Carmel’s perspective, a symptom of distress or market inefficiency. Instead, it signifies a healthy ecosystem where founders are tackling more complex, harder problems, and the venture industry has adeptly evolved to provide the necessary support.
"The IPO window is not closed because the markets are bad. The markets are great. It is closed because companies don’t need to go public to keep building," Carmel asserts. This statement challenges the conventional wisdom that a slow IPO market signals underlying economic weakness. Instead, it posits that the abundance of private capital, coupled with the rising costs and regulatory burdens of being a public company, has created an environment where remaining private for longer is often the more strategic path. Companies can prioritize long-term growth and innovation over short-term quarterly earnings pressures, allowing them to invest heavily in R&D, talent acquisition, and market expansion without the immediate scrutiny of public shareholders.
What has emerged in response is a more sophisticated and flexible capital stack. This intricate layering of funding mechanisms includes robust secondary markets, a burgeoning growth equity sector, and a diverse base of late-stage investors. Together, these sources provide the kind of patient, long-horizon capital essential for companies embarking on multi-decade journeys. This evolution means that companies can access significant capital at various stages of their development, allowing them to scale operations, acquire competitors, and pursue ambitious technological breakthroughs without the need for an early exit. Even within IPOs themselves, secondary capital has seen increased prominence, serving as a quiet but clear indicator of how the public listing event has evolved, often incorporating liquidity for early stakeholders as part of the offering.
Economic Imperatives: Why Secondaries Fuel Strategic Innovation
For an extended period, secondaries were largely relegated to a niche status within venture capital, often misunderstood or overlooked. Jared Carmel, however, was among the earliest proponents to argue that their role would expand dramatically, becoming central to the industry’s capacity to foster American innovation. This conviction has been thoroughly validated by market trends. "Secondaries are not just supporting the venture ecosystem. They are becoming a key pillar of venture ecosystem," Carmel emphasizes, underscoring their integral role.
The rationale behind this growing importance is straightforward and compelling. When a company is genuinely committed to building for the long term, every additional year of private runway translates into another year of compounding capability. A robust secondary market provides this invaluable time. It offers a critical lifeline for early employees and initial investors, allowing them to realize liquidity from their holdings without compelling the company into a premature public offering. This mechanism helps maintain healthy cap tables by preventing forced sales or internal discord over liquidity, ensuring that founders can retain key talent and attract new long-horizon investors who bring fresh conviction and capital precisely when a company most needs reinforcement. Ultimately, this flexibility empowers founders to continue building toward the kind of category-defining outcomes that the U.S. venture industry has historically championed.
Beyond individual company benefits, the strategic importance of secondaries extends to broader national priorities. Carmel highlights the critical sectors where MVP primarily focuses its investments: artificial intelligence, defense, space, supply chain, and frontier compute. These are not merely three-year or ten-year ventures; they are typically twenty-year journeys, many of which carry significant implications for national security and economic competitiveness. "The companies are going to need to build longer because they have more to build," Carmel explains. This points to the increasing complexity and capital intensity of modern innovation, especially in areas vital for national interests.
Carmel traces his own strong conviction on this back to the profound shock of the COVID-19 supply-chain crisis, when the United States grappled with an inability to reliably source essential medications or N95 masks. This crisis starkly illuminated a concerning trend he had observed for years: the quiet outsourcing of strategic capabilities that the country could not afford to be without. The companies now emerging to rebuild and fortify this capacity share a common profile. They demand deep capital, exceptional technical talent, and an organizational willingness to plan in decades rather than merely quarters.
This last requirement—the willingness to plan in decades—is precisely what the venture industry has had to mature into. Supporting these founders goes far beyond simply writing a check. It necessitates a sustained partnership, an unwavering commitment to standing alongside them through the long, arduous stretches of difficult work that define true innovation. "Being helpful isn’t pushing a transaction. It’s being the person the founder calls before they decide whether they need one," Carmel states, articulating a philosophy of deep engagement and trusted advisory. For Carmel and MVP, this translates into tangible support: facilitating introductions to board members with profound expertise in critical sectors like defense and national security, connecting companies with seasoned operating leaders capable of guiding scaling efforts, and maintaining a steadfast investment throughout the long middle of a company’s journey—a period when the work is most challenging and immediate validation is often furthest away.
Market Dynamics and Growth of Private Capital
The growth of the secondary market is inextricably linked to broader shifts in private capital. The last two decades have seen an explosion in the availability of private capital, with a proliferation of growth equity funds, corporate venture arms, and dedicated secondary funds. This abundant liquidity has allowed companies to raise successive rounds of private funding at increasingly higher valuations, delaying the need for an IPO.
Data consistently illustrates this trend. According to Renaissance Capital, the average age of a company at IPO has steadily increased, from around 8 years in the early 2000s to over 11 years in the 2010s, and even longer for many high-profile tech companies in the 2020s. This extended private runway provides companies with critical time to develop mature business models, achieve significant scale, and iron out operational complexities away from the public market’s glare. For instance, companies like Stripe, SpaceX, and Epic Games have commanded multi-billion-dollar valuations while remaining private for well over a decade, demonstrating the efficacy of this prolonged private growth strategy.
The regulatory environment has also played a role. The Sarbanes-Oxley Act of 2002 imposed significant compliance costs on public companies, while the JOBS Act of 2012, while intended to make it easier for smaller companies to go public, also somewhat eased restrictions on private fundraising and secondary market activity for a period, indirectly contributing to companies staying private longer. The cumulative effect is a more robust, liquid, and sophisticated private market that can adequately fund companies through late stages, reducing the urgency for a public offering primarily driven by liquidity needs.
Benefits Beyond Liquidity: Supporting Founders and Talent
The impact of a mature secondary market extends far beyond simply providing an exit route. For founders, it offers strategic flexibility, allowing them to control the timing of their company’s public debut and avoid dilutive "down rounds" or fire sales if primary capital becomes scarce. It also helps preserve equity for future rounds and employee incentive plans.
For employees, especially those who joined early, secondary liquidity is a game-changer. It transforms paper wealth into tangible assets, enabling them to purchase homes, fund education, or pursue other personal financial goals without having to wait for an uncertain IPO date. This not only serves as a powerful retention tool but also attracts top talent who are increasingly aware of the value of diversified compensation packages that include potential secondary liquidity options. A company that can offer this flexibility is often more attractive to seasoned professionals who might otherwise be hesitant to join a private startup due to the illiquid nature of their equity.
Moreover, secondary transactions can introduce new, long-term investors onto a company’s cap table. These investors often bring not only capital but also strategic expertise, industry connections, and a patient perspective that aligns with the company’s extended growth trajectory. This infusion of fresh capital and strategic partnership can be invaluable during challenging periods or significant growth phases.
Navigating the Future: Challenges and Opportunities
While the secondary market has matured significantly, it is not without its challenges. Valuation complexities remain, especially for highly illiquid assets or companies with unique business models. Market volatility can also impact demand and pricing for secondary shares. Regulatory scrutiny, particularly regarding transparency and investor protection in private markets, could also evolve as the market grows in prominence.
However, the opportunities far outweigh these challenges. The continued growth of private capital, the increasing complexity of technologies like AI and quantum computing, and the strategic importance of sectors like defense and space ensure a sustained demand for long-horizon capital. The secondary market is poised to become even more integrated into the standard operating procedures of venture capital, offering an essential valve for liquidity and a mechanism for continuous capital flow.
A Forward-Looking Perspective: Optimism for American Innovation
When asked about his enduring motivation, Jared Carmel’s initial response is deeply personal: he remains fascinated by the unique privilege of immersing himself in a dozen companies annually, constantly learning from the visionary individuals who are building them. His second, equally profound, answer centers on the future of the nation.
"Technology is being built by more people than at any other moment in my career. Our job is to keep capital flowing in a way that matches that reality," Carmel asserts. This statement encapsulates the compelling argument for the U.S. venture industry, articulated by an observer who has witnessed its cyclical booms and resets firsthand. The companies American founders are creating today are frequently characterized by longer horizons and greater capital intensity than those of a generation past. The industry, through its evolution and the institutionalization of mechanisms like the secondary market, has adapted to provide precisely the robust support these ventures require. The ongoing mission, therefore, is to ensure that capital continues to flow consistently and effectively to these companies throughout every stage of their ambitious journeys, thereby sustaining the vibrant engine of American innovation.
Manhattan Venture Partners, through its pioneering work in institutionalizing the secondary market, exemplifies this adaptive spirit, standing as a critical enabler for the next generation of American innovators.
