Benefits of a Secondary Sale

A secondary sale brings several benefits to the stakeholders in a startup.

Companies stay private much longer than before.  

Those in the company need access to capital. 

For founders, a secondary sale provides some liquidity in the near term giving them the opportunity to continue growing their business for a larger exit.

For employees, a secondary sale provides access to liquidity reducing job hopping to find a larger salary elsewhere.

For the early stage investors, the secondary sale provides returns before subsequent larger rounds of funding dilute them.

Institutional investors can use the secondary sale to buy into the business bringing additional expertise as well as cleaning up the cap table of smaller investors.

This makes the business more attractive to the eventual buyers of the business.

 

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.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
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.