Article

How secondary sales work at private companies

Carta Free Intermediate

A calm explainer of what a secondary actually is, who has to approve it, and how the price gets set, before you raise it with your board.

Open on carta.com ↗

Curated reading that points you to the sources, not personalised investment advice.

It answers 16 questions

  1. Should I sell some of my equity in a secondary?
  2. How much of my stake is reasonable to sell in a secondary?
  3. Should I sell some shares in a secondary just to build a safety net for my family?
  4. Is the tax different when I sell founder shares versus shares I got from ESOPs?
  5. How does a founder secondary actually happen, mechanically?
  6. What happens to my tax if my startup gets acquired?
  7. Will selling in a secondary upset my investors?
  8. How am I taxed if the company buys back my shares instead of an outside buyer?
  9. How is the money I get from a secondary taxed in India?
  10. Should I buy a house right after a secondary or a big funding round?
  11. What's the difference between a secondary and the company doing a buyback?
  12. At what stage of the company can I even do a secondary?

And 4 more across the hub.

Read with it

  1. The clearest short piece on how to think about giving up and holding equity, and why a smaller slice of a bigger outcome is the... paulgraham.com Essay The Equity Equation Paul Graham
  2. The India-specific piece: perquisite tax at exercise, capital gains at sale, and the startup deferral, with worked examples in... ClearTax Article How ESOPs are taxed in India ClearTax
  3. The India reference on short vs long term capital gains, holding periods, and rates for equity, funds, and property, so you... ClearTax Article Capital gains tax in India ClearTax
  4. Zerodha Varsity free module on how investment income is taxed in India: capital gains, holding periods, and turnover, in plain... Zerodha Varsity Course Markets and Taxation Zerodha Varsity
  5. A no-nonsense, ad-light India personal-finance site: plain math and free calculators for emergency funds, goals, and asset... Freefincal Tool Freefincal: goal-based planning and calculators M. Pattabiraman
  6. The best reminder that avoiding ruin beats chasing returns, and that wealth is the money you don't spend. The whole founder... The Psychology of Money Book The Psychology of Money Morgan Housel
eChai Partner Brands The partnership →