Should employees take partial liquidity in their equity when it is offered?

Sanjit Biswas · Dec 8, 2023

Personal liquidity from a prior exit is valuable mainly because it removes financial worry and frees bandwidth for higher-impact work, provided your values stay intact

Once you're not stressing about money for your family, you have more bandwidth to build companies or spend time with your kids rather than worrying about salary

Scope: varies by person and background

37:52 20VC: $18BN Market Cap and $1BN in ARR in 8 Years; Samsara | How to Find Product Market Fit Reliably | How to Create a Multi-Product Company | The Pros and Cons of Serial Entrepreneurship with Sanjit Biswas, Founder & CEO @ Samsara

Mati Staniszewski · Sep 8, 2025

Running secondaries and employee tender offers at almost every round is valuable because employees need a basic layer of financial security covered in order to take risk on a huge outcome

The company is betting on something huge, and people can only take that risk if they know liquidity exists; financial imperative is not the goal but a baseline good life needs to be covered before bigger aspirations take over

Scope: financial outcome is not the goal in itself

62:15 20VC: ElevenLabs Hits $200M ARR: The Untold Story of Europe's Fastest Growing AI Startup | The Real Cost of AI from Talent to Data Centres | How US VCs are in a Different League to Europeans | The Future of Foundation Models with Mati Staniszewski

Mati Staniszewski · Sep 8, 2025 · hedged

Liquidity helps because taking part of the personal risk off the table removes the greediness that money otherwise introduces into decision-making

Taking some of the risk out of the equation changes people's perception and lets them decide without financial greed driving it

Scope: to some extent

64:27 20VC: ElevenLabs Hits $200M ARR: The Untold Story of Europe's Fastest Growing AI Startup | The Real Cost of AI from Talent to Data Centres | How US VCs are in a Different League to Europeans | The Future of Foundation Models with Mati Staniszewski

Alan Chang · Jan 5, 2026

Companies should create liquidity opportunities for employee shareholders

People sometimes need to buy a house or a car, so some liquidity is helpful

52:44 20VC: $0-$260M in Revenue in Three Years: How We Did It | You Need to Work Weekends to Win — Most Founders Aren't Ambitious Enough | The Revolut Playbook: Speed, Urgency, Extreme Ownership, and Zero Excuses with Alan Chang @ Fuse Energy

Dan Siroker · May 15, 2024

Offering employees liquidity roughly every six months, including via secondary buyers between rounds, is healthy and creates retention power that is hard to achieve any other way

It relieves financial pressure, especially for people living in the Bay Area, and being the difference between an employee buying a house or not engenders real loyalty

Scope: only when you can find a willing buyer

27:33 20VC: Fundraising Wisdom that is Total BS; Dilution, Meeting Associates, Taking the Highest Price, Always Be Raising | Why Second Time Founders Are More Investable & Why Not To Hire People Out of College with Dan Siroker, CEO @ Limitless

Gili Raanan · Mar 28, 2026

The primary purpose of secondaries is retaining talent, not returning capital

Building important companies takes longer than the four-to-five-year vesting cycle, so the best employees end up fully vested with most of their family wealth tied to one company while refresh grants are structurally too small to be tempting — diversifying by joining another company becomes the rational move, and secondaries are the antidote

Scope: especially in cybersecurity, where companies take more cash and more time to build

31:21 20VC: The Venture Model is Broken | You Need to be Greedy and Selfish to Win Early Stage Investing | Why Margins Do Not Matter for Early-Stage Startups | The Growth Rate that is Required in a World of AI with Gili Raanan, Founder @ Cyberstarts

Dan Siroker · May 15, 2024 · speculative

Allowing employees to treat their stock as liquid is more retentive, not less, than the golden-handcuffs approach most investors recommend

The golden-handcuffs logic assumes there is no market liquidity so employees can't go elsewhere, which is an antiquated notion; he'd rather be known as the startup that lets people sell vested stock and grants more as they perform

Scope: his own theory, unproven — 'we'll see if this proves out true or not'; contrary to most of his investors' views

25:48 20VC: Fundraising Wisdom that is Total BS; Dilution, Meeting Associates, Taking the Highest Price, Always Be Raising | Why Second Time Founders Are More Investable & Why Not To Hire People Out of College with Dan Siroker, CEO @ Limitless

Immad Akhund · May 12, 2025

Founders should be relatively open to employee secondary sales rather than restricting them

A public company gets priced constantly anyway; employees should experience equity as actually valuable stock with a viable liquidity option, not a lottery ticket contingent on the founder deciding to IPO

Scope: "so far it's not been an issue" at Mercury

53:05 20VC Exclusive: Mercury Founder Launches First $26M Fund | Why Founders Should Take the Highest Price | Why Serial Entrepreneurs are Better | Why AI Is So Overhyped | The Future of Venture Capital with Immad Akhund

Mike Salguero · Apr 5, 2023

Running an annual company-funded tender to repurchase employee shares out of profits is a viable substitute for raising outside capital to create liquidity

They price the company via a 409A valuation each year and buy back shares with profits, giving employees liquidity without outside investors

Scope: paused this year to preserve cash as the tide goes out; he himself calls it 'probably crazy'

55:16 20VC: The Memo: Scaling to $600M Revenues with No Venture Funding, The Most In Detail Breakdown of Consumer Subscription Unit Economics & Why D2C and Consumer Subscription is Not a VC Backable Model with Mike Salguero, Founder @ ButcherBox

Roger Ehrenberg · Feb 19, 2024

Wise's annual employee tender process was a brilliant model — it gave employees real liquidity, brought in sophisticated pre-IPO investors, and progressively cleaned and concentrated the cap table

Shrinking the number of holders makes life easier and generated actual money for stakeholders long before the IPO

35:12 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital

Alan Chang · Jan 5, 2026

Holding Revolut equity is still the right call — he remains very bullish on the company and has only sold for personal consumption

He is still very bullish on Revolut

46:48 Hold the equity and sell only for consumption

Alex Bouaziz · Feb 1, 2023

Capping employee secondaries at around 10% of what they've earned lets them take money off the table without checking out

You want them liquid enough to be happy but still fully invested in executing

32:34 Cap employee secondaries at a modest fraction of earned value

Harry Stebbings · Feb 1, 2023

Giving a high performer a large liquidity event makes them work even harder, not less

33:11 Large liquidity event motivates a high performer to work harder not less

Harry Stebbings · May 23, 2026

Partial liquidity creates a damaging two-tier culture inside companies, splitting senior people who have taken millions off the table from newer employees who haven't hit vesting cliffs

66:28 Partial liquidity splits the company into two tiers

Chris Degnan · May 23, 2026

Employees should take some liquidity whenever they can — even just 5-10%

There is risk in everything, and taking money off the table meaningfully reduced financial stress for him and his wife

67:07 Always take some off the table