A secondary market is where investors trade securities they already own, contrasting with the primary market where securities are initially issued. In the secondary market, the original issuer is not involved, and transactions occur directly between investors. The stock exchange is a common example, facilitating the trade of publicly traded stocks.
In private equity or venture capital, the secondary market extends to existing stakes in funds or private companies. It enables early-stage investors to sell holdings before a company's exit, providing liquidity. Additionally, new investors can access stakes in companies or funds that might otherwise be unavailable to them.