AI, Defense, and the SPV-Driven Secondary Boom
The IPO drought isn't slowing the movement of capital. It's changing how and where it moves.
As the IPO window stays shut, the impact is rippling across the venture ecosystem. LPs aren’t receiving the distributions they expected, which means they have less capital to recycle back into new funds. This capital constraint is pushing both fund managers and LPs to look for alternative paths to liquidity. In response, investors are turning to SPVs to generate liquidity for their LPs.
At Sydecar, we're seeing a clear shift in how secondaries are being executed and where capital is concentrating. New data from our platform reveals where capital, conviction, and opportunity are converging.
This report analyzes 319 secondary deals closed on Sydecar’s platform between January 2023 and April 2025. Each chart is interactive; hover or click to explore the data in more detail.
Explore the data below.
Secondary SPV Market Growth 2023–2025
Secondary SPVs, meaning secondary transactions structured through standalone investment vehicles rather than traditional fund structures, aren’t just growing. They’re becoming the primary channel for liquidity as traditional exits stall, indicating an evolution from niche vehicles to core capital deployment strategies.
In just 24 months, average secondary deal size jumped 118%, from $943K in 2023 to $2.06M in 2025.
Top Secondary Market Sectors in 2025
Emerging managers are increasingly using secondary SPVs deals to target specific, high-conviction sectors that are defining the market.
Nearly 80% of secondary deal allocation is going to just two verticals:
AI (50%) – AI’s dominance in secondary deal allocation is driven by a combination of long exit timelines, inflated valuations making early liquidity attractive to employees and early investors, and strong investor appetite for exposure without waiting on an IPO.
Aerospace & Defense (28%) – These sectors are benefiting from growing government investment and heightened interest in national security, making these companies increasingly attractive targets for secondary transactions.
So far in 2025, only about 20% of secondary SPV capital has been allocated outside of AI and Aerospace & Defense.
LP Participation Trends by Sector
When more LPs show up, it’s usually because the deal is compelling, the lead is trusted, and the signal is strong.
While AI accounts for the largest share of secondary SPV capital allocated, Aerospace & Defense stands out for its LP enthusiasm, a potential signal of where emerging managers are building differentiated access and gaining an edge.
Deal Size Growth by Sector
Secondary SPV deal sizes are growing, but not evenly across sectors. Emerging managers appear to be doubling down on verticals where they can raise more per deal, attract more LPs, and allocate capital more efficiently.
From 2024 to 2025, AI and Aerospace & Defense deals experienced substantial growth in deal size, whereas the average deal size in all other sectors did not exhibit the same increase.
What This Means for Emerging Managers
For emerging managers, secondary SPVs are no longer just a liquidity workaround, they’re becoming a necessary strategy for long-term fund viability. With IPOs and M&A activity on hold, LPs are placing increased emphasis on DPI (Distributions to Paid-In Capital) as a measure of performance. Without distributions, LPs have less capital to recycle into future funds, which puts pressure on GPs to find alternative paths to liquidity if they want to maintain LP trust and succeed in future fundraising. Secondary SPVs offer an effective, efficient way to generate those distributions without waiting for the traditional exit windows to reopen.
With SPVs, you can:
Move fast
Lean into high-conviction sectors
Meet LP demand for targeted exposure to top-tier companies.
As LPs continue to rally around sector-focused deals, the ability to launch quickly and compliantly becomes a competitive edge.
Curious how quick and easy it is to stand up a secondary SPV? Explore our interactive secondary SPV demo: