IT’S A bargain-hunter’s dream, and for sellers it’s sometimes the only good option left.

Secondary markets – where backers of closely held startups can sell their stakes to other investors – are drawing increasing interest from venture capital funds and other money managers seeking to snap up chunks of private companies on the cheap.

Cash-strapped founders, employees and investors are under pressure to sell their stakes amid a wave of tech job cuts, a tepid IPO market and rising interest rates. That has helped to drive down prices.

As at May 31, shares of startups were trading at a median discount of 61 per cent compared to valuations at their latest funding rounds, according to a report by Forge Global Holdings Inc.

That is the hottest opportunity in the secondary markets since the 2008 financial crisis.

“It’s a sea change,” said Phil Haslett, founder of EquityZen, a marketplace for private shares. Until a year ago, hedge funds and VCs “would shun the secondary market,” he said. “Now they have capital to blow on it.”

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