Secondary stock sales means the founder sells a portion of their stock in the company in exchange for cash today.
There used to be a widespread belief in the VC world that you wanted to prevent founders from seeing any cash until the ultimate exit. As negotiating leverage has shifted towards founders this has gone away.
It's stupid anyway, since allowing founders to see a little cash up front actually aligns incentives much better once the company is somewhat successful.
There used to be a widespread belief in the VC world that you wanted to prevent founders from seeing any cash until the ultimate exit. As negotiating leverage has shifted towards founders this has gone away.
It's stupid anyway, since allowing founders to see a little cash up front actually aligns incentives much better once the company is somewhat successful.