At this year’s SpinLab Investors Day, the discussion turned to the question: How can founders, angels, and funds find liquidity in an ecosystem where exits often take a decade?
Under the title “Why the Startup Ecosystem Needs Secondaries”, experts from across the investment spectrum — Rain Tamm (Siena Secondary Fund), Philipp Semmer (Earlybird), Jozsef Bugovics (Pava Partners), Volker Bauer (stay-long GmbH), and moderator Thomas Knaack (Rotonda), explored how secondary transactions are reshaping venture capital and why they are becoming a critical pillar of startup growth and sustainability.
In contrast to primary rounds, where new capital flows directly into the company, secondary transactions involve the transfer of existing shares between shareholders: founders, employees, angels, or even limited partners (LPs). The company itself doesn’t receive new money, but its stakeholders gain liquidity.
A decade ago, such deals were rare in Europe. Today, they’re becoming increasingly common and, as the panelists agreed, essential to a functioning and resilient startup ecosystem.
Philipp Semmer from Earlybird opened the discussion by describing the growing liquidity challenge facing European venture funds: “We’re telling our investors how great our portfolio companies are, but at some point, they ask: when will I see money?”
Earlybird’s €50 million deeptech fund typically holds around 10% ownership in its startups. As these companies mature, follow-on rounds often require massive capital injections, like €20 to €30 million or more, which can be difficult for smaller funds to sustain.
To manage this, Earlybird is exploring secondary transactions at the LP level - through continuation or opportunity funds that allow existing LPs to exit and new ones to join.
“Venture capital doesn’t work if there’s no way to get money out before year ten,” Semmer emphasized.
For Rain Tamm, founder of Siena Secondary Fund, secondaries are not just a financial instrument, they are an engine for ecosystem renewal.
Tamm, who has been investing in startups for over 25 years, saw early that secondary transactions could bridge missed opportunities and accelerate reinvestment.
“We buy from founders, employees, even early angels - people who want to free up capital to back the next generation of startups,” Tamm explained.
Siena’s €50–60 million fund focuses on high-growth companies in Central and Eastern Europe and the Nordics, particularly Estonia - a region that has produced breakout successes like Skype, Wise, and Bolt.
“When founders sell a small portion of their shares, it doesn’t mean they’ve lost faith. It allows them to take more risk and build even faster,” Tamm added, echoing investor Steve Jurvetson’s philosophy of supporting modest founder liquidity.
From the perspective of business angels, Volker Bauer of stay-long GmbH described a structural challenge: “As an angel, after six or seven years, your role in the company naturally declines, but your capital is still locked up. You can’t redeploy it to new startups.”
This capital lock-up, Bauer argued, slows down the recycling of experience and money - essential ingredients for a healthy ecosystem.
“Secondaries are crucial not only for founders but also for angels. They keep the market moving.”
Jozsef Bugovics from Pava Partners, who advises growth-stage technology companies, sees secondaries as a natural evolution of the European VC market.
“For early investors who put in €100,000 and now see their shares worth a million - selling part of it makes perfect sense. It’s not a sign of weakness, it’s just good management.”
He noted that in many €20–100 million rounds, buyers often combine new primary capital with secondary purchases, sometimes at a 20–30% discount. This helps clean up cap tables and align long-term investors while giving early backers a way to exit profitably.
However, Bugovics also cautioned that secondaries require careful valuation: “If the last round happened three years ago, you need to reassess. Discounts can range from +30% premium to -90%, depending on performance and share class.”
Founder secondaries, once viewed skeptically, are now increasingly accepted, though within limits.
As Semmer noted: “If founders sell 5–10% of their shares, that’s totally fine. They might just want to buy a home or diversify. It becomes problematic only if they sell too much, too early.”
All participants agreed that Europe still lacks the institutional infrastructure to support a robust secondary market.
Tamm highlighted a key irony: “The EIF - Europe’s largest LP - can invest in Western European buyout funds, but can not invest in VC secondary funds, because they do not have a mandate. I think it is a big question mark, where the liquidity should come from, if EIF does not support it. ”
Bauer added that for secondaries to truly scale, Europe must create diversified, tradable secondary funds - portfolios of hundreds of startups that can smooth out risk and deliver steady, predictable growth.
“That’s how we’ll unlock real liquidity and when that happens, the entire ecosystem will explode,” Bauer predicted.
Bugovics closed on an optimistic note: “American and Middle Eastern capital is already flowing into Europe. If regulation keeps evolving and professional understanding deepens, we’ll see a boom in secondaries over the next years - especially in Germany.”
Secondaries are no longer a niche financial maneuver - they’re becoming a vital mechanism for keeping Europe’s startup ecosystem dynamic, liquid, and fast-moving. They enable founders to stay motivated, angels to reinvest, and funds to manage liquidity, all while ensuring that capital keeps flowing back into innovation.Without secondaries, Europe’s startup flywheel risks slowing down.