Allowing employees to sell stock on the secondary market Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Startups that take a long time to reach an exit should consider allowing employees to sell stock on the secondary market. While many startups launch an exit in the five to seven-year range, many more are still running well past this timeframe. Founders compensated employees with stock options. Employees signed up for the startup with the expectation that it will find an exit. Employees selling their stock in the early days will receive scrutiny from the team. Employees cannot sell their stock without support from the company due to rights of first refusal. Companies can help employees sell their stock through a fundraise. The advantage here is that the fundraise provides a valuation for the stock. Employee stock sales are typically sold at a discount of ten to fifteen percent. Series C fundraises and beyond are often set up to allow employees to sell their shares on the secondary market. Existing investors often purchase these secondary offerings. Companies should facilitate these sales to provide liquidity to their employees. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today. _________________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.