Startup equity & liquidity
Secondaries and taking chips off the table
Turning some paper equity into money you can live on, without signalling you have lost faith.
Should I sell some of my equity in a secondary?
It is reasonable, and increasingly normal, for a founder to sell a small slice of equity in a secondary once the company is doing well. The case fo...
How much of my stake is reasonable to sell in a secondary?
There is no fixed rule, but the amount most boards are comfortable with is small: often something like 5 to 15 percent of a founder's holding, or j...
How does a founder secondary actually happen, mechanically?
A secondary is you selling existing shares to a buyer, rather than the company issuing new ones, so the moving parts are the buyer, the price, and ...
Will selling in a secondary upset my investors?
A small, well-explained sale usually will not; a large or secretive one can. Investors back founders partly for their all-in commitment, so the wor...
How is the money I get from a secondary taxed in India?
When you sell your own shares in a secondary, you are selling a capital asset, so the profit is generally taxed as capital gains, not salary. The g...
What's the difference between a secondary and the company doing a buyback?
Both let you turn paper equity into cash, but the buyer is different, and that changes a lot. In a secondary, an outside investor buys your existin...
At what stage of the company can I even do a secondary?
A secondary needs a willing buyer and a defensible price, so it usually becomes realistic only once the company is doing well enough that investors...
I just took money off the table in a secondary. What should I actually do with it?
The whole point of a secondary is to de risk your personal life, so the first move is usually the boring, powerful one: shore up the basics before ...
Do my co-founders and I have to sell the same amount in a secondary?
No, there is no rule that founders must sell equal amounts, but how you handle it matters more than the raw numbers. Investors and your board usual...
Should I sell in a secondary now or wait for an IPO or acquisition?
This is really a question about risk, not timing the top, so frame it that way. Waiting for an IPO or acquisition can mean a bigger payout, but it ...
eChai Partner Brands
