Secondary sales shift from founder windfalls to employee-retention tools
Recent startup secondary sales are helping employees cash out stock, shifting from 2021’s founder-focused cashouts to improve hiring and retention.
San Francisco: In May, AI sales startup Clay let most workers sell some of their shares at a $1.5 billion value. This type of deal is called a tender offer. Since then, other growing companies have done the same thing.
Six-year-old Linear finished a tender offer at the same value as its $1.25 billion investment round. Three-year-old ElevenLabs approved workers selling stock worth $100 million at a $6.6 billion value. Last week, Clay again offered its staff a chance to sell at a $5 billion value, which is 60% higher than before.
These deals may look like the big cash-outs from 2021. Back then, Hopin’s founder sold $195 million in stock before the company’s value dropped a lot. But now, the sales are different because they include workers, not just founders.
Investors today don’t like when founders get most of the money from these deals. Instead, they support sales that help all workers. This can help companies hire and keep good people who might otherwise go to public companies or big startups like OpenAI.
Some people say these worker sales are good. They help keep employees happy and working hard. But others worry that if companies use these deals instead of going public, investors may have trouble getting their money back. This could make it harder for new companies to get funding later.