In an evolving venture capital landscape, where the gestation period for high-growth companies is lengthening, the secondary market has emerged not merely as a niche player but as a fundamental pillar supporting the U.S. innovation economy. Jared Carmel, a co-founder of Manhattan Venture Partners (MVP), a firm that has dedicated over a decade to building the institutional infrastructure for this shift, emphasizes the critical role secondaries play in providing patient, long-term capital for ambitious American enterprises.
Reading the Market’s Cycles: From Dot-Com Bust to Secondary Market Pioneer
Carmel’s entry into the professional world coincided with a challenging economic climate, graduating in the aftermath of the dot-com bubble and weeks before the September 11th attacks. This period, he notes, offered a stark lesson in market cycles, revealing how industries and investment themes often resurface years after initial enthusiasm wanes. He observed patterns in sectors like SPACs, telecom infrastructure, and clean tech, which experienced periods of intense interest followed by significant downturns, only to regain traction later.
A pivotal moment arrived in late 2009 when a friend, preparing to leave Facebook, sought to sell some of his shares. Carmel, then acquiring these shares at a modest price, recognized the nascent potential of private company liquidity. Though he no longer holds those specific shares, the transaction illuminated a new avenue in venture capital. "This was before the secondary markets were even a market," Carmel recalls, highlighting the nascent stage of this financial instrument. "Before people knew it existed."
This early foray into providing liquidity for employees at burgeoning tech companies like Facebook, Twitter, and Palantir eventually led Carmel to G Squared. In 2014, a profound conviction about the future of venture capital propelled him to co-found Manhattan Venture Partners. The core tenet of MVP was the institutionalization of the secondary market, demanding the same rigor, diligence, and underwriting standards as any established primary venture capital firm.
The New Reality: Companies Building for Longer Journeys
The American venture industry has undergone a quiet but significant transformation over the past decade. Companies are now being founded with longer development timelines, with some of today’s largest private entities existing in that status for over two decades. Carmel views this not as a symptom of distress but as an indicator of founders undertaking more complex and ambitious ventures, and the industry adapting to support these protracted journeys.
"The IPO window is not closed because the markets are bad. The markets are great," Carmel asserts. "It is closed because companies don’t need to go public to keep building." This shift signifies a maturation of the funding ecosystem, where traditional IPO paths are no longer the sole or even primary route for scaling.
The Sophistication of the Capital Stack
In place of an over-reliance on public markets, a more sophisticated and flexible capital stack has emerged. This new paradigm integrates secondary markets, growth equity, and a diverse array of late-stage investors. Together, these components can furnish the patient, long-horizon capital essential for companies embarking on twenty-year trajectories. The increasing prevalence of secondary capital within IPOs themselves is a subtle yet potent signal of how the public listing event has evolved. It reflects a growing understanding that liquidity for early stakeholders can be a crucial element in a successful public debut, allowing the company to transition smoothly rather than being forced into an exit before it is strategically advantageous.
Secondaries: Fueling the Innovation Engine
For an extended period, the secondary market was relegated to the fringes of venture capital, often perceived as a niche segment. However, Carmel was among the early proponents who foresaw its ascendance to a central role in sustaining American innovation. His foresight has proven accurate.
"Secondaries are not just supporting the venture ecosystem. They are becoming a key pillar of venture ecosystem," Carmel states. The underlying logic is clear: for companies engaged in long-term development, each additional year of private runway translates into compounded capability and resilience. A robust secondary market provides this invaluable time. It enables early employees and investors to achieve liquidity without exerting pressure on the company to pursue an IPO prematurely. This mechanism helps maintain healthy cap tables, allows for the infusion of fresh capital and strategic insights from new long-horizon investors at critical junctures, and ultimately grants founders the space to cultivate category-defining outcomes that have historically characterized the U.S. venture industry.
Investing in America’s Strategic Capabilities
Beyond the financial mechanics, a deeper question for observers of the venture industry revolves around the nature of the long-horizon companies being built. Carmel’s focus centers on critical sectors where MVP actively invests: artificial intelligence, defense, space, supply chain, and frontier compute. These are not ventures with short-term horizons; they are often twenty-year endeavors with profound implications for national security and economic competitiveness.
"The companies are going to need to build longer because they have more to build," Carmel explains. His conviction on this point was significantly reinforced by the COVID-19 supply chain disruptions, which exposed vulnerabilities in the U.S.’s ability to reliably source essential goods like medications and personal protective equipment. This event underscored a trend he had been observing for years: the quiet outsourcing of strategic capabilities that are vital for national resilience. The companies now emerging to rebuild these capacities share a common profile: they demand substantial capital, specialized technical talent, and a strategic mindset that prioritizes decades over quarters.
The Evolving Role of Venture Capital
This demand for long-term planning represents an evolution for the venture industry itself. Supporting these founders is no longer solely about financial investment; it extends to sustained partnership through the challenging phases of development. "Being helpful isn’t pushing a transaction. It’s being the person the founder calls before they decide whether they need one," Carmel emphasizes.
For Carmel, this means actively contributing through board introductions with expertise in critical sectors like defense and national security, connecting companies with operating leaders who can facilitate scaling, and demonstrating a commitment to remain invested through the arduous middle stages of a company’s lifecycle – periods often characterized by intense work and deferred validation.
A Foundation for Future Optimism
When asked about his enduring motivation, Carmel offers a dual response. Personally, he finds immense satisfaction in dedicating his career to deeply understanding a select group of companies each year and learning from their builders. Professionally, his optimism is rooted in the nation’s technological advancement.
"Technology is being built by more people than at any other moment in my career," he states. "Our job is to keep capital flowing in a way that matches that reality." This perspective underscores the vital role of the U.S. venture industry, particularly as it navigates through cycles of boom and reset. The companies American founders are currently creating are often more capital-intensive and require longer development timelines than those of previous generations. The industry’s adaptation to this new reality, by ensuring capital flows consistently through every stage of a company’s journey, is the critical work ahead.
Manhattan Venture Partners’ commitment to institutionalizing the secondary market and its focus on long-horizon, strategically important companies highlight a significant evolution in venture capital, positioning it as a vital partner in securing America’s future economic and national security landscape.
For more information on Manhattan Venture Partners, visit their website at www.mvp.vc.
