---
title: "What Is Spread?"
term: "Spread"
description: "In investing, spread is the gap between two prices or rates—such as bid versus ask in a secondary sale, or the yield difference between a loan and a benchmark."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/spread
---

# What Is Spread?

> In investing, spread is the gap between two prices or rates—such as bid versus ask in a secondary sale, or the yield difference between a loan and a benchmark.

**Spread** is the distance between two related numbers—usually what one party will pay and what another will accept.

## How it works

In **venture secondaries**, sellers often anchor to the last primary round price while buyers discount for illiquidity, lack of information, or company performance. The spread between those views drives whether a trade happens. In **credit**, spread means the extra yield a borrower pays above a risk-free or index rate; wider spread reflects higher perceived risk.

Fund LPs also talk about spread between **NAV** marks and realized exit prices when judging whether reported valuations match what the market would pay.

## Why it matters

- **Founders:** A wide secondary spread signals investors disagree on your trajectory; it can complicate tender offers or employee liquidity programs.
- **Investors:** Your edge often comes from correctly pricing spread—buying when fear widens it, selling when optimism compresses it.

## Common mistake

Quoting a single "market price" for private shares. Without a tight spread and willing counterparties, the number is hypothetical.

## Related ideas

Secondary market, NAV, bid-ask, and discount to last round.
## When you will see it

Secondary brokers quote indicative prices with wide spreads when information is thin—common for late-stage private companies with uneven performance.

## Questions to ask

- Is the spread driven by company fundamentals or market liquidity?
- What discount to last primary round clears a trade today?
- Are there ROFR or company consent rules blocking transfers?
## Practical takeaway

Treat **spread** as something to define precisely in writing—not assume everyone in the room shares the same meaning. In term sheets, board decks, and LP updates, tie the concept to a concrete decision: a vote, a price input, a fund policy, or a metric formula. When definitions drift, teams misprice risk, miss leverage, or waste cycles on the wrong conversation.

## FAQ

### What is spread in simple terms?

In investing, spread is the gap between two prices or rates—such as bid versus ask in a secondary sale, or the yield difference between a loan and a benchmark. It is a label you will hear in deal conversations, cap tables, and fund marketing—not abstract theory.

### Why does spread matter?

Shows up in secondaries, credit, and pricing negotiations whenever buyers and sellers disagree on fair value. Founders and investors both need a shared definition before term sheets, diligence, or exit talks get serious.


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Source: https://venturecapitaltracker.com/glossary/spread