One of the hot issues that are recently emerging out of
financing transactions in the high-tech industry is the sale of
stock by founders of a company, as part of an investment round in
the company ("Secondary
Sale").
In short, most of the early stage high-tech companies are initially
bootstrapped i.e., financed by their founders, and
sometimes also by friends & family, and angle investors.
Because companies lack significant finance sources in their early
stages, the founders usually withdraw minimal salaries from the
company as compensation for their services. The first time when
founders meet with significant finance sources is upon a later
financing round. Thus, in many events, upon an investment event the
founders insist on getting (or the investors propose to allocate)
some amounts from the investment, to make a Secondary Sale and to
allow some liquidity for the founders. In some later financing
stages, investors offer to purchase common stock in addition to
