A secondary sale is the one exit route where you keep the company. This guide covers the four formats, the 5–20% rule of thumb, how tender prices get set, who has to say yes, and what the 2025 record year at Stripe, Revolut and OpenAI tells you about doing it well.
TL;DR
- A secondary sells existing shares to an investor; no new money reaches the company. You get liquidity, the cap table changes hands, the business keeps running.
- Four formats: a founder carve-out inside a priced round, a company-run tender offer, a direct sale to a secondary fund, or a platform-brokered trade.
- Boards accept 5–20% of a founder's stake. Carta's H1 2025 data shows the median tender priced at zero discount to the last round, the 75th percentile at 15%.
- Expect ROFR and co-sale rights, board consent, transfer restrictions and tax at capital-gains or ordinary rates depending on jurisdiction and holding period.
You have spent seven years building a company that investors now value at $400 million. On paper you are worth $80 million. In practice you rent, you have two kids approaching university, and every board meeting ends with someone proposing a bigger, riskier bet. That gap between paper wealth and real life is exactly what a founder secondary sale solves. You sell a slice of your shares to an investor who wants more exposure; the company gets nothing, you get cash, and the business carries on with you still in the chair.
A decade ago this was a quiet, slightly embarrassing conversation. In 2025 it was mainstream. Jefferies counted $240 billion of global secondary transactions in 2025, up 48% year on year and a record. Carta reported that 16,538 employees sold stock in tender offers on its platform in 2025, the highest annual total it has ever recorded. Stripe, Revolut, OpenAI, SpaceX, Databricks and Canva all ran employee liquidity programmes instead of listing. The secondary has become a substitute for the IPO, not a prelude to it.
This article sits in the Kurums Founder Exit Playbook as the fifth of eight routes. Unlike a strategic sale or a listing, you are not exiting the company. You are exiting a part of your risk. That changes the politics, the pricing and the paperwork, and it is worth understanding all three before you raise your hand at the next board meeting.
Is this route right for you?
Best fit when
- Your company is past Series B, growing, and investors are asking for more allocation than the primary round offers.
- You hold a concentrated position worth $20M+ on paper and your personal balance sheet cannot absorb another five-year wait.
- The board wants you to go for a bigger outcome and you want to be able to say yes without betting the house.
Think twice if
- Your last round is more than 24 months old and you would be setting a price the market has not confirmed.
- The company is burning cash and raising a down round; selling founder shares now signals you are heading for the exit.
- Your shareholders' agreement gives investors a ROFR plus co-sale and you have not yet mapped who will actually buy.
Typical shape
| Deal size | $1M–$30M for a founder; $5M–$6.6B for a company tender |
| Who buys | Existing investors, crossover funds, secondary specialists, platforms |
| Consideration | Cash, usually at or below the last preferred price |
| Founder stays? | Yes — that is the point; typically sells 5–20% of stake |
| Timeline | 6–12 weeks for a tender; 2–6 weeks inside a priced round |
What is a secondary sale, and how is it different from raising money?
In a primary round the company issues new shares and the cash lands on the company's balance sheet. In a secondary, you sell shares that already exist and the cash lands in your personal account. The company's share count does not change, no dilution happens, and the buyer takes over whatever rights attach to the shares you sold. For common stock that usually means voting rights but no liquidation preference; for preferred stock sold by an early investor it means the preference travels with it.
The distinction matters because investors, boards and tax authorities treat the two differently. A primary is an investment decision about the business. A secondary is a transfer decision about a person. Your shareholders' agreement almost certainly restricts transfers, gives existing investors a right of first refusal, and requires board consent. Those clauses were written for exactly this moment, and the legal checklist earlier in this series covers how to read them.
Secondaries also come in two flavours by seller. A founder or employee secondary moves common stock from insiders to investors. An investor secondary moves preferred stock from an early fund to a later one, typically when a seed fund needs to return capital. Both can run through the same tender process, but pricing, tax and politics differ. This article is about the first kind, where you are the seller.
Which format should you use?
There are four ways to get a secondary done, and the right one depends on how much you want to sell and who else wants to sell with you. The simplest is a founder carve-out inside a priced round: the lead investor agrees to buy, say, $5 million of your common stock alongside the $50 million primary. The price is anchored to the round, the lawyers are already engaged, and the board has already approved a transaction. This is how most Series B and C founder liquidity happens.
The second is a company-run tender offer, where the company invites all eligible holders to sell up to a cap to a pre-arranged set of buyers at a single price. Stripe's February 2025 tender at a $91.5 billion valuation and OpenAI's October 2025 sale of roughly $6.6 billion at $500 billion are the giant versions. PitchBook's 2025 US VC Secondary Market Watch says Nasdaq Private Market alone hosted $13.2 billion of tender offers in 2025, averaging $142 million each. Carta's H1 2025 data shows the median Series C+ tender was $27.6 million.
The third is a direct sale to a secondary fund. Firms such as Industry Ventures, StepStone, Lexington and dozens of newer specialists buy founder and early-employee stakes directly. You negotiate one-on-one, the price reflects their view rather than the round price, and the company still has to approve the transfer. The fourth is a platform trade through Forge Global, EquityZen, Nasdaq Private Market, Augment, Caplight or Carta Liquidity, where the platform matches you with accredited buyers. Platforms suit smaller blocks; founders with $10 million-plus usually go direct.
Why companies now prefer the tender
PitchBook notes that tender offers let the company control pricing, volume and who ends up on the cap table, which is nearly impossible once employees start trading on platforms. For you as founder the tender has a second advantage: your sale is one line among hundreds, so it carries little signalling weight. A founder selling $8 million alone looks like a statement. The same $8 million inside a $200 million tender looks like good governance.
What real exits teach: three cases
Stripe set the template for the secondary-as-exit. After a $95 billion round in 2021 and a cut to $50 billion in 2023, the company ran a tender in February 2024 at $65 billion, offering current and former employees more than $1 billion of liquidity, then a further investor-led secondary at $70 billion later that year. In February 2025 it announced a third tender at $91.5 billion in which, according to its newsroom release, investors and Stripe itself would buy shares from current and former employees. TechCrunch reported the buyers were largely existing investors; Stripe disclosed $1.4 trillion of 2024 payment volume, up 38%. The Collison brothers did not sell publicly in these rounds, but the structure gave every long-tenured employee a path to cash without a listing, and let early investors recycle capital.
Revolut announced in August 2024 that it had signed a secondary share sale led by Coatue, D1 Capital and Tiger Global at a $45 billion valuation to give employees liquidity. Bloomberg reported in September 2024 that founder and CEO Nik Storonsky personally sold roughly $250 million of shares in that round, one of the largest single founder secondaries in European history, while retaining a controlling stake. In November 2025 the company ran a second employee secondary at $75 billion, led by Coatue, Greenoaks, Dragoneer and Fidelity with Andreessen Horowitz and Nvidia's NVentures participating, on revenue of $4 billion and pre-tax profit of $1.4 billion. Revolut did not disclose the size of either sale. Chair Martin Gilbert had said an IPO was at least a year away; two secondaries later it still has not listed.
In October 2025 Reuters reported that current and former OpenAI employees sold roughly $6.6 billion of shares to Thrive Capital, SoftBank, Dragoneer, Abu Dhabi's MGX and T. Rowe Price at a $500 billion valuation, up from $300 billion in the primary round months earlier. The company had authorised more than $10 billion of sales. Later reporting, summarised by The Implicator citing the Wall Street Journal, showed the mechanics: the per-person cap was raised from $10 million to $30 million because investor demand exceeded supply, sellers had to have held their shares for two years, more than 600 people participated and about 75 sold the full $30 million. Roughly a third of the authorised volume went unsold, which suggests many employees chose to keep most of their exposure. PitchBook calculates this single tender was 6.2% of all US venture secondary value in 2025.
How much can you sell without spooking anyone?
The unwritten rule is 5–20% of your stake, or enough to take the pressure off without changing your incentives. A founder holding 20% of a $400 million company has $80 million on paper; selling $5–10 million clears the mortgage and the school fees and leaves 88–94% of the upside in place. Boards accept that. A founder trying to sell a third of their position triggers a different conversation about whether they still believe in the company.
Carta's H1 2025 tender data gives you the market benchmark. The median cap on current employees in a secondary sale was 20% of vested holdings; in company buybacks it was 25%. Former employees were often capped at 0% in buybacks and 20% in secondaries. OpenAI's October 2025 tender allowed up to $30 million per person after demand from Thrive, SoftBank, Dragoneer, MGX and T. Rowe Price exceeded supply, and required two years of holding. Fewer than 80 people hit the ceiling, which tells you most participants sold well under the maximum.
The right number for you depends on three things: how long since you last took any money out, how large your stake is relative to the other founders, and whether the lead investor in the current round is buying. If the lead is buying your shares, they have already decided the discount is worth it to get more ownership. If you are asking existing investors to buy from you, keep the request modest and frame it around tax planning and family needs, not doubt about the plan.
How is a founder secondary priced?
Three reference points set the price. The first is the last preferred round price, which is the ceiling in most negotiations. The second is the common-stock fair market value from your most recent 409A or equivalent valuation, which is often 30–60% below preferred at mid-stage companies because common sits behind the preference stack. The third is what secondary buyers are actually paying for comparable names, which Forge, Augment and Caplight publish.
Carta's H1 2025 data shows the median tender priced at 0% discount to the last round and the 75th percentile at 15%. That reflects the strong companies that run tenders. In the broader secondary market, PitchBook and Forge data show wide dispersion: AI names trade at premiums while pre-2022 unicorns that have not raised since trade at 30–60% discounts. Jefferies reports that LP-portfolio pricing for venture and growth funds averaged 78% of NAV in 2025, versus 92% for buyout, which gives you a sense of the professional discount for venture risk.
The common-versus-preferred question is where founders leave money on the table. When the lead investor buys your common inside a priced round, they usually pay the preferred price or a 10–20% discount to it. A secondary fund buying common on its own will start from the 409A and argue upward. The difference on a $10 million block can be $2–4 million, which is why the carve-out in a round is almost always the better price even if it is the smaller cheque.
What a repriced common does to your option pool
If investors pay close to preferred for common stock, your 409A appraiser will see a market transaction in common and may lift the fair market value accordingly. That raises the strike on every new option grant and can push the value of existing grants into taxable territory in some jurisdictions. Companies handle this by keeping tender participation below a threshold, pricing at a visible discount, or timing the tender so the next 409A lands after the round. Ask your CFO before you agree a price, not after.
What the lawyers and the diligence team will examine
The legal workstream for a secondary is lighter than a company sale but denser in one place: transfer mechanics. Nobody is buying the company, so there are no business reps, no indemnity escrow and no earnout. Instead the lawyers spend their time on who is allowed to buy, in what order, with what information, and under which securities exemption. A company-run tender in the US typically relies on Rule 701 and Regulation D and must follow tender-offer rules on timing and equal treatment; a UK or EU tender needs to stay within prospectus exemptions and the company's articles. Expect 4–8 weeks of document work for a tender and 2–4 weeks for a founder carve-out inside a round.
Diligence checklist
- Shareholders' agreement and articles: ROFR, co-sale, transfer-consent and lock-up clauses, and whether any investor holds a veto over founder transfers.
- Cap table and tax lots: which shares you hold, when each lot was issued or exercised, vesting status and any 83(b) or equivalent elections on file.
- Prior transfers and pledges: any earlier secondary, loan against shares or gift to a trust that affects what you can sell cleanly.
- Most recent 409A or independent valuation of common stock, and the appraiser's view of how the proposed price will affect the next one.
- Securities-law exemption: Rule 701/Reg D analysis in the US, prospectus exemptions in the UK/EU, and accredited-investor status of each buyer.
- Disclosure package for buyers: financials, material contracts, litigation and risk factors, with equal information to all participants if it is a tender.
- Employment and founder agreements: good-leaver/bad-leaver provisions, clawbacks or buyback rights the company could trigger after you sell.
- Anti-money-laundering and sanctions checks on buyers, especially sovereign or non-domestic funds; FDI screening if the company is in a sensitive sector.
Deal terms that move money
- Right of first refusal (ROFR)Company and existing investors can match the buyer's price before an outsider closes. Map who will exercise before you negotiate, or your buyer may end up being someone else.
- Co-sale / tag-alongInvestors may sell alongside you in proportion to their holdings, cutting your allocation. Ask them to waive it or size the deal so there is room for everyone.
- Board and transfer consentArticles usually require board approval for any transfer of common stock. Get it minuted early and conditional on price range, not after you have signed a term sheet.
- Lock-up and holding requirementsTender rules often require a minimum tenure, and buyers may ask you to hold the remaining shares for 12–24 months so your sale is not read as the start of an exit.
- Representations by the sellerYou warrant title, authority and no undisclosed liens. In a tender you do not give business reps; in a direct sale a fund may ask for limited knowledge-based ones. Resist broad ones.
- Information rights and side lettersA new institutional buyer will want ongoing reporting. Agree whether they join the investor rights agreement or get a narrower side letter so existing investors do not object.
- Repricing and 409A consequencesA common-stock trade at near-preferred prices can raise the next 409A. Agree with the CFO and appraiser how the tender will be treated before pricing is announced.
General information, not legal or tax advice. Rules vary by jurisdiction; take advice from counsel in every country where you have an entity, staff or customers. See the series legal pillar: Due diligence and legal preparation.
Who has to say yes, and what will they ask?
Start with the shareholders' agreement. Almost every venture-backed company has a right of first refusal that gives the company, then the investors, the option to buy your shares at the agreed price before an outsider can. Many also have co-sale or tag-along rights, which let investors sell alongside you pro rata, shrinking your allocation. Transfer restrictions in the articles or bylaws typically require board consent for any transfer of common stock. None of this stops a secondary; it decides who the buyer ends up being.
The board conversation is about signalling and alignment. Investors will want to know why now, how much, and whether the other founders are selling too. They will care about the optics for employees, especially if staff are not being offered the same opportunity. The cleanest answer is to propose a company-wide tender where you participate on the same terms and caps as everyone else. Carta's data shows participation rates of 46% at seed through Series B and 66% at Series C+, so your team will likely take part if offered.
Buyers will ask for information. In a tender run by the company they get a disclosure package: financials, cap table, material contracts, risk factors. A secondary fund buying directly will want the same plus management access, and may ask for ongoing information rights. Your investors may resist adding new information-rights holders. Agree in advance what the buyer sees and whether they sign the existing investor rights agreement or a side letter.
What are the tax consequences of a founder secondary?
This varies by jurisdiction and you should take advice before signing anything, but the mechanics are consistent. A sale of shares you have held for more than the local long-term threshold is usually taxed as capital gain at a lower rate than ordinary income. In the US that threshold is 12 months and the federal rate is 20% plus 3.8% net investment income tax for high earners; in the UK, business asset disposal relief can reduce the rate to 14% on the first £1 million of lifetime gains from April 2025, rising to 18% in April 2026. Many European countries have holding-period discounts; some have none.
US founders should check Qualified Small Business Stock eligibility. Under Section 1202, stock issued by a C corporation with under $50 million in gross assets at issuance, held for five years, can exclude up to $10 million of gain; the July 2025 tax law raised the cap and asset threshold for stock issued after 4 July 2025 and introduced partial exclusions at three and four years. A founder selling in year four might wait, or sell only the pre-2021 tranche. Your lawyer can confirm which lots qualify.
Two traps catch founders in secondaries specifically. If the company pays you more than fair market value, or the sale is structured as a company repurchase, some authorities treat part of the proceeds as compensation taxed at ordinary rates. And if you exercised options recently, early-exercised shares have their own clock. Keep tax lots clean, ask for a lot-by-lot schedule from your cap table provider, and model the after-tax number before you set the amount.
Why has the secondary become an alternative to exiting?
The simple reason is that the IPO window stayed mostly shut from 2022 to 2024 and the companies that could have listed chose not to. Stripe is the clearest case: it ran tenders in 2024 at $65 billion and $70 billion and in February 2025 at $91.5 billion, just below its 2021 peak of $95 billion, while processing $1.4 trillion of payments. Its founders have said repeatedly that they do not need public capital. Employees get liquidity every year, investors get a mark, and nobody files an S-1.
The second reason is that capital followed. Jefferies' $240 billion figure for 2025 is the global total across LP-led and GP-led deals. PitchBook estimates US venture direct secondaries alone at $62.5–120.9 billion in 2025, with OpenAI's $6.6 billion tender representing 6.2% of the year. Industry Ventures, acquired by Goldman Sachs in 2025, estimated the global venture secondary opportunity at over $120 billion for the year. When that much money wants in, the company does not need to list to give insiders a way out.
For you, this means a secondary is no longer a one-off favour. Companies like Revolut have institutionalised annual or biennial liquidity events; the question becomes which event you sell in, not whether you can. The downside is that the longer the company stays private, the more your personal wealth depends on a series of negotiated private prices rather than a public market. Treat each tender as a chance to rebalance, and read the IPO guide for what changes if the board does eventually choose to list.
What it is worth — and what reaches you
Valuing a secondary is simpler than valuing an exit because the headline number already exists: the last round. The work is in the adjustment. Buyers start from the preferred price per share, deduct for the fact that common sits behind the liquidation stack, deduct again for illiquidity and information asymmetry, and then add back for scarcity if the company is one investors cannot otherwise access. Carta's H1 2025 tender data shows median discounts of 0% and 75th-percentile discounts of 15% for companies strong enough to run tenders; the broader secondary market shows much wider dispersion. The valuation guide in this series covers the underlying multiples; here the question is what discount to them you accept.
From headline price to founder bank account
Say the last round valued the company at $400 million and you sell 2.5% of the company, one-eighth of your 20% stake. At the preferred price that is $10 million. A 10% common discount takes it to $9 million. In a tender there is no escrow or indemnity holdback, but the company may charge sellers a 1–3% transaction fee to cover platform and legal costs, so call it $8.8 million. If the shares are long-term capital assets in the US, federal tax at 23.8% plus state tax of 0–13% leaves you with roughly $5.6–6.7 million; a UK founder using business asset disposal relief on the first £1 million and 24% above it would net a different but comparable figure. If the lots qualify for QSBS, the federal number can be close to zero. The spread between those outcomes is why you model the tax lots before you set the amount.
The process, step by step
Work out what you actually need: debt to clear, tax to reserve, a diversification target. Translate it into a percentage of your stake and check it against the 5–20% norm. Get a tax-lot schedule from your cap table provider and a preliminary view from a tax adviser in your jurisdiction.
Raise it with the lead investor first, then the chair, then the full board. Frame it as part of a company liquidity programme if possible. Ask whether the next round lead would buy, and whether existing investors intend to exercise ROFR or co-sale rights.
Carve-out inside the round, company tender, direct fund sale or platform trade. Run a short process if selling directly: two or three secondary funds, a disclosure pack, indicative prices within two weeks. For a tender, appoint a platform or law firm to administer it.
Board consent, ROFR notices and waiting periods, co-sale waivers, securities-law analysis, disclosure package, offer document and purchase agreement. In a tender, the offer must stay open for the required period and treat all participants equally.
Shares transfer, cash settles, the cap table and registers update. Confirm the buyer's information rights, file any tax elections or reports, and set the date of the next liquidity window so employees and investors know this is a programme, not a one-off.
Red flags and founder risks
Frequently asked questions
Does a founder secondary dilute other shareholders?
No. In a secondary the shares already exist and simply change owner, so the company's share count and everyone else's percentage stay the same. What changes is who holds the votes and economics attached to your shares. If the buyer is an existing investor, their ownership rises by exactly what yours falls. Dilution only arises if the secondary is bundled with a primary round, and then it comes from the new shares issued in the primary, not from your sale.
How much of my stake is it acceptable to sell?
The market norm is 5–20% of a founder's vested holding, and Carta's H1 2025 tender data shows median employee caps of 20% in secondary sales and 25% in company buybacks. Within that range, investors generally read the sale as sensible diversification. Above it, expect questions about commitment. Size the number from your actual needs, mortgage, tax reserve, a diversified portfolio, and present it that way rather than as a percentage of paper wealth.
Will I get the same price as the preferred investors?
Sometimes. Inside a priced round, lead investors often buy founder common at the preferred price or a 10–20% discount because they want more ownership. In a company tender Carta's 2025 data shows a median 0% discount to the last round. A secondary fund buying common on its own will start from the 409A fair market value, which can be 30–60% below preferred, so the format you choose has a direct effect on the price you receive.
How is a founder secondary taxed?
It varies by jurisdiction and you need local advice, but the general pattern is capital-gains treatment if you have met the holding period: 12 months in the US, with a federal rate of 20% plus 3.8% NIIT; in the UK business asset disposal relief can lower the rate on the first £1 million of lifetime gains. US founders should check QSBS eligibility under Section 1202, which can exclude a large part of the gain after five years. Sales structured as company repurchases or tied to employment risk being taxed as ordinary income.
Founder Exit Playbook — all 11 parts
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Management Buyouts and Employee Ownership: Exiting Without Selling to an Outsider
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Sources
- Stripe — Tender offer to provide liquidity to current and former employees (Feb 2025)
- TechCrunch — Stripe finalizes tender sale at a $91.5B valuation (27 Feb 2025)
- Reuters via BNN Bloomberg — OpenAI hits $500 billion valuation after share sale (2 Oct 2025)
- The Implicator — OpenAI lets staff sell $30M each in October employee tender program
- Crunchbase News — Revolut valuation spikes in secondary share sale (Nov 2025)
- PYMNTS — Revolut valued at $45 billion in secondary share sale (Aug 2024)
- Bloomberg via BNN — Revolut CEO offloaded about $250 million in August share sale (Sept 2024)
- Jefferies — 2025 Global Secondary Market Review: Another Record-Breaking Year
- Carta — Tender offers are helping fill the gap left by venture capital's IPO lull (H1 2025)
- Carta — Startup tender offers hit record 16K employees in 2025
- PitchBook — 2025 Annual US VC Secondary Market Watch
- Industry Ventures — How big is the secondary market for venture capital? (2023–2025E)
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