Secondary Discount / Premium

The secondary discount or premium is the percentage difference between the price at which pre-IPO shares actually trade in the secondary market and the company's last primary round valuation. A 20% discount means secondary shares are trading at 80 cents on the last-round dollar; a 5% premium means buyers are paying above the last round.

Discounts are the norm in most secondary markets: illiquidity, ROFR risk, SPV fees, and uncertainty about the company's trajectory all justify buyers requiring a discount to the primary price. Premiums occur when demand is extreme and supply is scarce — typically in the final months before a well-anticipated IPO.

Illustrative example: a company raised its last primary round at a $20B valuation. Secondary market transactions this quarter are clearing at $16–17B implied valuation — a 15–20% discount. An employee considering a sale at the mid-point of $16.5B should compare that to their cost basis, tax impact, and alternative uses of capital before deciding whether the discount is acceptable.

The gotcha: econ.markets binary contracts and traditional secondary equity transactions are structurally different instruments. A binary contract prices the *probability of an outcome* (IPO before a down round), not the equity value of the company. Secondary discount analysis applies to share transactions; binary contract pricing reflects event probability, not valuation. Comparing the two directly conflates pricing mechanics.