Secondary Sales 101

When a tech worker joins a startup, the two sides usually strike a bargain in which the employee accepts a reduced salary in exchange for an interest in the company's equity. This bargain is vital to the success of venture capital-backed companies. The company preserves precious cash to fuel growth, and the employee gets rewarded upon an exit (an IPO or sale of the business) — typically by exercising previously granted options that enable them to purchase shares at a fraction of their then current value and, thereby, participate in the exit event as a shareholder.

However, exits can be a long time coming. The significant growth of private capital as an alternative to seeking funding in the public markets means that, on average, companies are staying private longer. On average, they're staying private over twice as long as in 2000. This creates a situation in which founders and employees hold a valuable but illiquid, and possibly volatile, asset. Reasonably, at some