---
title: "What Is LP Secondary?"
term: "LP Secondary"
description: "An LP secondary is a sale of an existing limited partner's stake in a private fund to another buyer, rather than a new capital commitment to the fund itself."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/lp-secondary
---

# What Is LP Secondary?

> An LP secondary is a sale of an existing limited partner's stake in a private fund to another buyer, rather than a new capital commitment to the fund itself.

**LP secondary** refers to a transaction where an existing limited partner sells their interest in a private fund to a buyer, who takes over future capital calls and distributions tied to that commitment.

### How it works

Unlike a primary commitment—where an LP wires fresh capital into a new or existing fund—a secondary transfers an already-committed position. The seller may want liquidity before the fund exits its companies, to rebalance asset allocation, or to free capital for a new vintage.

Buyers are often secondary specialists or other institutions. Pricing is negotiated against the fund's reported net asset value (NAV), portfolio quality, and how much unfunded commitment remains. A stake trading at 85 cents on the dollar might reflect weak marks, heavy future calls, or a GP relationship the seller wants to exit.

The fund's GP typically must consent to the transfer under the limited partnership agreement. The portfolio companies themselves usually do not change; only who sits on the LP register does.

### Why it matters

- **Founders:** You rarely negotiate LP secondaries, but they can shift which institutions hold indirect exposure to your cap table and how patient capital behaves at exit.
- **Investors:** Secondaries are a liquidity tool for LPs stuck in long-dated funds. They also reveal market sentiment about a GP's track record when stakes trade at steep discounts.

### Common mistake

Assuming an LP secondary is the same as a [company secondary](/glossary/secondary-sale), where shareholders sell stock in an operating business. LP secondaries move fund interests, not startup shares directly.

### Related ideas

See also [LP transfer](/glossary/lp-transfer), [LP-led secondary](/glossary/lp-led-secondary), [NAV](/glossary/nav), and [distribution](/glossary/distribution).

## FAQ

### What is LP secondary in simple terms?

It is when an existing fund investor sells their partnership interest to someone else instead of waiting for the fund to wind down. The buyer steps into the seller's capital calls, distributions, and remaining portfolio exposure.

### Why does LP secondary matter?

For LPs and fund investors, secondaries provide liquidity when a fund is illiquid. For GPs, a large secondary can signal LP fatigue or a portfolio rebalancing wave, which can affect future fundraising conversations even if portfolio companies are unchanged.


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Source: https://venturecapitaltracker.com/glossary/lp-secondary