For founders and executives at venture-backed startups, equity is often the centerpiece of compensation – and the primary driver of long-term wealth. But unlike cash compensation, that equity is typically illiquid for years. Outside of an IPO or a sale of the company, opportunities to turn shares into cash are limited, tightly controlled and often more complex than anticipated. That is especially true when there is no active secondary market.
At a high level, the challenge is straightforward: there is no natural buyer, no established price and no frictionless mechanism to transact. But the real constraints run deeper. Founder liquidity sits at the intersection of contractual restrictions, securities law, internal governance and practical market realities, and each of those layers matters.
