When Deel hit a $12 billion valuation in early 2023, co-founder Alex Bouaziz did something that would have been taboo a decade ago. He sold $300 million worth of his personal shares on the secondary market while staying fully committed to running the company. He did not leave. He did not cash out entirely. He simply took some risk off the table so he could keep building without the financial pressure that destroys so many founders before they reach the finish line.
Bouaziz is far from alone. In the 12 months ending June 2025, total venture capital secondary transaction volume reached an estimated $61.1 billion, surpassing the combined value of all VC-backed IPOs over the same period at $58.8 billion. The secondary market has become the default liquidity mechanism for founders who want to stay in the game without waiting for an exit that may be years away.
Why Founders Are Selling Shares Before the Exit
The median time from Series A to exit now exceeds seven years. For many founders, that means spending the most productive decade of their career with virtually all of their net worth locked in illiquid startup equity. One bad quarter, one market correction, or one failed product launch can wipe out years of paper gains. Secondary sales solve this problem by letting founders convert a portion of their equity into cash without triggering a company sale or IPO.
The global secondary market grew from $112 billion to $162 billion between 2023 and 2024, a 45% increase according to Jefferies. That growth has continued into 2025 and 2026 as more founders recognize that financial security and entrepreneurial ambition are not mutually exclusive. Investors increasingly agree. The old stigma that selling shares signals a lack of confidence has faded as data shows that founders with some personal financial stability actually make better long-term decisions for their companies.
How Secondary Sales Actually Work
A secondary transaction involves a founder (or early employee) selling existing shares to a third-party buyer. Unlike a primary funding round, no new shares are issued, and no new capital enters the company. The seller gets cash, the buyer gets equity, and the company’s cap table updates to reflect the new ownership.
Buyers typically include late-stage venture funds, institutional investors that specialize in secondary transactions, and sometimes the company’s existing investors who want to increase their stake. The process usually requires board approval and may be subject to right-of-first-refusal clauses in the company’s shareholder agreement. Understanding the different types of startup funding helps founders see where secondary sales fit in the broader capital landscape.
Most secondary sales happen alongside or shortly after a primary funding round when there is a clear, recently validated price per share. This timing matters because it gives both buyer and seller confidence in the valuation. Selling between rounds is possible but typically results in a discount of 10 to 30% because the buyer is taking on more uncertainty.
Real Founders Who Took Chips Off the Table
The trend has accelerated dramatically in 2025 and 2026. Clay, the AI-powered sales automation startup, allowed most of its employees and founders to sell shares at a $1.5 billion valuation. Linear, a six-year-old project management tool competing with Atlassian, completed a tender offer matching its $1.25 billion Series C valuation. ElevenLabs authorized a $100 million secondary sale for staff at a $6.6 billion valuation, double its previous mark.
What makes these deals notable is their structure. Rather than large founder-only payouts reminiscent of the 2021 boom, current secondary transactions are structured as company-wide tender offers that benefit employees alongside founders. Investors view this far more favorably because it serves as a retention tool and signals that the company cares about its team’s financial wellbeing, not just founder enrichment.
Element451, an AI-powered higher education CRM, completed $175 million in secondary liquidity in December 2024. Laurel, formerly Time by Ping, secured $20 million in secondary liquidity at a $510 million valuation in June 2025. These are not unicorns grabbing headlines. They are growth-stage companies using secondary sales as a strategic tool to keep their teams motivated and their founders focused.
How Much Should a Founder Sell
The general guidance from investors and legal advisors is that selling 5 to 10% of your personal holdings is seen as reasonable and rarely raises concerns. Going above 15 to 20% starts to draw scrutiny, especially from existing investors who may interpret large sales as a lack of confidence in the company’s future.
The key is communication. Founders who proactively discuss their intention to sell with their board and lead investors before the transaction almost always get support. Those who try to sell quietly through back channels create trust issues that can haunt future fundraising efforts. Transparency is not optional in this process.
Tax planning also matters significantly. Secondary sales trigger capital gains tax, and the structure of the sale (direct sale vs. tender offer, short-term vs. long-term gains) affects the tax bill substantially. Working with a tax advisor who understands startup equity is worth the investment, especially for founders selling shares worth seven or eight figures. Building strong revenue streams alongside equity value gives founders even more flexibility when deciding how much to sell and when.
When the Timing Is Right
Not every founder should rush to sell shares. The best time to pursue a secondary sale is when three conditions align. First, the company has recently raised a round or achieved a significant valuation milestone that establishes a credible price. Second, the founder has a genuine personal financial need, whether that is paying off debt, buying a home, or simply reducing the anxiety that comes from having 95% of your net worth in a single illiquid asset. Third, the company’s trajectory is strong enough that the sale will not be misinterpreted as a vote of no confidence.
Founders in the pre-seed or seed stage should generally wait. The equity is too early-stage to command a meaningful price, and selling at this point sends a confusing signal. Series B and beyond is the sweet spot where valuations are high enough to make the sale worthwhile and the company is mature enough that a modest founder sale does not raise alarms.
The New Normal for Founder Wealth
The era of founders going all-in with zero personal liquidity until an IPO or acquisition is ending. The data is clear: secondary transaction volume now exceeds IPO volume, tender offers are becoming standard at growth-stage companies, and investors increasingly see founder liquidity as a feature rather than a bug. A founder who is not worried about making rent is a founder who can take the kind of bold, long-term bets that build truly great companies.
The most important shift is cultural. Selling some shares is no longer seen as giving up. It is seen as smart financial planning that keeps founders in the game longer, reduces burnout-driven decisions, and aligns the interests of everyone at the table. If you are sitting on significant paper wealth and feeling the pressure of having your entire financial future tied to a single outcome, the secondary market in 2026 offers more options than founders have ever had before.
