This article was posted on the ChosunBiz MoneyMove (MM) site at 3:32 p.m. Jan. 7, 2026.
A secondary (acquisition of existing shares) fund of venture capital (VC), which once seemed to be a prized asset in the venture investment market, has turned into a burden. After the COVID-19 endemic, the VC market froze completely, and secondary funds that buy VCs' assets from other VCs drew attention as an exit option, but the mood for existing-share transactions has sharply changed with the recent stock market boom. Fund managers say, "Good deals no longer come to secondaries."
On the 7th, VC industry sources said the number of investment review committee meetings held by secondary fund managers, including large VCs, has sharply declined recently. About a year ago in early last year, at least two existing-share acquisition items per month were presented to each manager's review committee, but since the second half of the year it has been determined that even one item in two months is not being brought forward.
The head of a VC that manages a secondary fund of more than 200 billion won said, "A secondary fund is literally a fund that buys the existing shares of portfolio companies whose fund term has come due at a discounted price," adding, "Until early last year we could pick good companies whose listings were delayed at low prices, but the situation has completely changed recently."
The stock market boom is seen as leading to difficulties in securing deal flow for secondary funds. Riding the strength of the domestic stock market, money has poured into the public offering market as well, and VCs have turned to a strategy of extending fund terms and waiting for an initial public offering (IPO) rather than selling portfolio companies' existing shares at a discount to secondary funds.
Even major limited partners (LPs) of venture investment funds have begun to guard against "fire-sale recovery." Until 2024, LPs such as pension funds and mutual aid associations pressured VCs to "liquidate even if it incurs some losses," but from midlast year they appear to have withdrawn cashing-out demands and adopted a stance of waiting for recovery performance.
A deal team member at a large VC said, "Recently LPs themselves have been suggesting extending fund terms when there are portfolio companies likely to go public," adding, "In the past VCs handed equity to secondaries at prices more than 30% below book value because it was difficult to extend terms, but now there is no need to choose that option."
Prospects for revitalization of the KOSDAQ market, a major exit channel for VCs, are also cited as a reason secondary funds are being shunned. In particular, as the government rolled out KOSDAQ market activation policies such as expanding the tax benefit limits of the KOSDAQ venture fund, VCs uniformly adopted listing as the strategy for recovery instead of early cashing out by selling existing shares.
There are even concerns about a qualitative decline in secondary funds. So-called "ace"-level corporations with high listing potential and strong prospects for post-listing success go straight to listing after extending terms instead of to secondary funds, and it is highly likely that only distressed assets lacking self-sustainability will come onto the market for secondary funds.
The increase in secondary funds is also a negative factor. Because secondary fund sizes are considered limited, many rushed to form secondary funds. According to the Venture Investment Information Center and others, in just the two years of 2024 and last year, 20 newly formed funds, about 24% of all currently managed secondary funds, were newly established.
An industry official in the VC sector said, "If secondaries used to be in the dominant position to set prices, now multiple funds compete over a very small number of high-quality deals and secondaries are in the subordinate position," and predicted, "For the time being, the essence of secondary funds will be pre-IPO competition to secure certain high-quality stocks just before listing."