Should venture investors use secondary sales as an exit channel, and what does selling signal?

Jason Lemkin · Sep 20, 2023

For companies at scale with good founders, investors should hold rather than take secondary — keep doubling down instead of selling

The downside is bounded (worst case down 20-30%, since founders past $50-100M in revenue won't quit) while the upside is enormous, as with The Trade Desk going from a $1B IPO to $40B; he also doesn't want the cash or the taxes

Scope: applies to companies north of $50-100M in revenue; requires good founders; he has personal financial security that allows this posture

72:36 20VC Roundtable: Is the VC Model Broken? The Biggest Disconnect Ever Between TVPI & DPI, Why Market Size is Dangerous, Why "Go Fast" is Terrible Advice, The Dangers of Raising Large Rounds at High Prices & Why Next Year Will See the Biggest Hiring Spree i

David Tisch · Feb 5, 2024

Seed investors should generally hold rather than sell secondaries, because the compounding at the end of a company's life is far more valuable than the compounding at the beginning

The path from zero to $1B is impossible to predict, but $1B to $5B is more predictable and visible, so the later compounding is the more reliable and larger source of return; the job is to back generational outlier companies, which takes sticking with them to the end

Scope: does not reject secondaries entirely; selling can make sense if you believe that valuation is the outcome size and there's no further 5-10x on the table

56:04 20VC: The Biggest Misconceptions & Hardest Truths About Seed Investing Today; Why The Best Founders Don't Need You, Why Uncapped SAFEs Are Good, Why Reserves Are Bad, Why Signalling is BS, Why Price Doesn't Matter with David Tisch & Terrence Rohan

David Tisch · Feb 5, 2024

A company moving from $5B to $10B doubles the seed investor's return, which is the simplest math in venture

57:10 20VC: The Biggest Misconceptions & Hardest Truths About Seed Investing Today; Why The Best Founders Don't Need You, Why Uncapped SAFEs Are Good, Why Reserves Are Bad, Why Signalling is BS, Why Price Doesn't Matter with David Tisch & Terrence Rohan

Kevin Hartz · Jul 22, 2024

Investors should hold their positions for life rather than sell, because power law winners dwarf the many companies that go to zero

Historically over decades, if you sit on all the companies even though most go to zero, the power law winners will be so massive they dwarf everything else

0:00 20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Kevin Hartz · Jul 22, 2024

Investors should hold positions for life rather than sell on the way up

Historically over decades, most companies go to zero but the power law winners are so massive they dwarf everything else; his job is finding and building companies, not selling

19:22 20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Shardul Shah · Sep 16, 2024 · hedged

For power-law winners the right posture is to buy and hold and let others inform when to sell

The business is finding fund returners, so selling winners defeats the purpose

Scope: applies to the winners that make up power law contributors; self-describes as 'probably more in the Charlie Munger school'

40:48 20VC: Index's Shardul Shah on Why Market Size is a Trap | Biggest Lessons on Pricing from Leading Rounds in Wiz & Datadog | Why Benchmarks & Averages in VC are BS | How Index Makes Decisions and Why Growth & Early are the Same Investing Style

David Frankel · Oct 14, 2024

Selling any shares in The Trade Desk and Uber was a mistake — you shouldn't sell down companies with real moats

These are great moat companies and there was no good reason to bet against them, though hindsight is the most precise science

Scope: acknowledges this is hindsight

59:58 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Mike Maples · Jan 6, 2025 · hedged

Investors who get in the money often lose sight of how much more in the money they could get

Scope: framed as a point of agreement with Brian Singerman

33:29 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Miles Dieffenbach · Aug 4, 2025

Selling venture secondaries as a long-term investor is dangerous because fat right-tail outcomes can materialize in years eight through thirteen of a fund and are essentially unforecastable

His own 2012 vintage fund had one remaining asset held at a 30% discount to a ~$5bn round and below CMU's $1m NAV tracking threshold; Circle is now a ~$50bn company adding three turns to the fund in its thirteenth year, and the Calpers purchase of Yale's book reportedly produced a $100m write-up from Circle alone within two months — nobody could have predicted Circle trading at 100x EBITDA or stablecoins becoming crypto's hottest sector

Scope: admits he would likely have sold the same position a year and a half ago; assumes Yale underwrote it the same way

57:55 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Martin Mignot · Aug 11, 2025

Index will by and large hold its positions until IPO and beyond rather than selling meaningfully into secondary markets

Returns are so concentrated in a small number of names that when you are a big owner in one you want to ride it as long as possible, and the public market gives the best price discovery, which you want access to

Scope: not a taboo — may sell some when a fund reaches the end of its life cycle and needs liquidity; 'never sell a lot' rather than never sell

45:23 20VC: Figma, Scale, Wiz: Inside Index's Decacorn Factory | Decision-Making, Investment Process, Biggest Lessons, Biggest Misses | Why Gross Margin is a Fallacy at Seed | Never Turn Down a Deal on Price with Martin Mignot, Partner @ Index Ventures

Harry Stebbings · Nov 21, 2025

The last double is where the value sits: a company going from $18B to $36B is not a fundamental change in the business, but that $18B of value likely exceeds everything else in your portfolio, and you risk losing it by selling

Late-stage progression happens by simply executing as planned, yet the absolute dollars dwarf the rest of a portfolio

66:36 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Mitchell Green · Mar 7, 2026

Selling their Shopify IPO stake was a bigger miss than any deal they declined, since holding it would have returned their second fund twice over

The position required no additional work or capital — just holding

56:29 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Miles Clements · Mar 9, 2026

With genuine outliers the right move is to keep buying rather than diversify — Accel led CrowdStrike's subsequent rounds and bought the IPO instead of taking chips off the table, and is glad it did

CrowdStrike went from ~$1M of software revenue at a $160M post to a $100BN company; every opportunity to sell would have been a mistake

Scope: depends on what the founder wants for the company

46:15 20VC: Inside Accel's $4BN Growth Investing Machine | Cursor is Dead is Total BS: Here is Why | What Missing Rippling and ElevenLabs Taught Us | Are $2BN-$10BN IPOs Dead | Why Now is a Great Time to be Thoma Bravo with Miles Clements

Matt Murphy · Jul 27, 2026

You should not sell down your winners today, because more than ever outliers compound and drive fund returns

In this environment the winners keep compounding, so they are the last positions you want to trim; at most take ~20% off the table if an older fund has LP liquidity dynamics, or trim once the company matures or delays going public for a long time

Scope: allows ~20% secondary for LP liquidity in older funds; later trimming acceptable once the company matures or an IPO is far off

14:55 20VC: Leading Anthropic's First Ever Round | Will Open Source Threaten Anthropic's Business | Do Margins Matter in a World of AI | Why Triple, Triple, Double, Double is Not Good Enough Today | Why Series A is Hard Today with Matt Murphy @ Menlo

Ed Sim · Oct 27, 2023

Investors who take 1x back rather than holding on have not failed; the smarter growth funds that deployed at the peak and return 1x or slightly above will look good relative to the many that end up underwater

Taking money off the table now allows reinvestment elsewhere at better prices, while many peak-vintage growth positions will end up underwater

Scope: applies to growth funds that deployed at the market peak

30:16 20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

Ed Sim · Jan 10, 2024 · hedged

More late-stage investors are now willing to take 1x back and redeploy rather than chase their original markup

Anecdotal evidence from the boards he sits on and conversations with others, plus deals like Loom selling for around $950M-$999M against a $1.5B 2021 round where the last investor voted with founders to sell

Scope: anecdotal; he is not himself a late-stage investor

19:37 20VC: Did Figma Kill M&A Markets in 2024, The Three Biggest Mistakes Made in Growth Investing, The Three Requirements Companies Need to Go Public in 2024 with Ed Sim and Jamin Ball

Mitchell Green · Mar 28, 2025

The right model for emerging managers is to invest at seed and Series A and sell part of the position in the B or C — returning DPI while still riding the winners

Growth funds, crossover hedge funds and public funds wanting private exposure have created deep secondary demand; partial sales return money without exiting the position

Scope: sell only part of the position, not the whole stake; aimed at emerging managers

27:30 20VC: Why Traditional VC is Broken: How VCs Learned Nothing from 2021 | Why LPs are More Important than Founders & Advice to Emerging Managers | Bull Case for Bytedance & Why TikTok's Ban Doesn't Matter with Mitchell Green, Lead Edge Capital

Harry Stebbings · Feb 2, 2026

For IRR purposes, LPs would rather have a 3x return today than a 4.5x in two to three years that depends on a successful IPO and a good hold

There was significant execution risk plus IPO lockup risk baked into holding, and time value matters for IRR

Scope: about a specific position they sold this year

38:35 20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

Mitchell Green · Mar 7, 2026

He would sell a large chunk of ByteDance at a $1.3T valuation even while believing the company can reach $100B of earnings, because the exit multiple risk at that price is unacceptable

$100B of earnings at 20x is $2T, but you can't know what multiple it actually trades at, and what matters is your total return on the whole investment at that price

Scope: hypothetical offer price

29:19 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Mitchell Green · Mar 7, 2026

A small early-stage fund in its first couple of funds can generate outstanding DPI by taking chips off the table repeatedly rather than holding for moonshots

Not every company goes to the moon; investors are the client who pays the bills, so returning money is the game

35:50 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Harry Stebbings · Aug 8, 2026

The velocity of cash is under-considered: certain DPI now is preferable to a possible double that requires waiting five years to IPO plus an eighteen-month lockup

The time cost and uncertainty of waiting outweigh the extra multiple

47:39 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Julio Vasconcellos · Sep 23, 2022 · hedged

Selling 10-20% of a large position to return the fund or distribute to LPs is a good trade-off, but one should never sell an entire position before a final exit

It guarantees some returns in the bank while leaving plenty of exposure to the upside, which is necessary compensation for the huge risk taken at the early stage

Scope: only when the position is big enough that 10-20% returns the fund

40:21 20VC: Why Greed is the #1 Enemy of Venture Returns, Why Not Enough VCs Play to Win and Lessons from Scaling to $100M and 1,200 Employees and Then Cratering with Julio Vasconcellos, Founder @ Atlantico

Beezer Clarkson · Oct 18, 2023

You can absolutely make money on those disappointing consumer outcomes; returns depend on when you exit the investment

A manager selling 10-25% of ownership into later rounds could return a fund or half a fund while still holding upside, or distribute stock when it's high

Scope: subject to lockups and other parameters that may make it impossible; numbers illustrative

7:11 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Beezer Clarkson · Oct 18, 2023

Selling 10-20% of a breakout position into a very high-priced late round is not in conflict with 'hold your winners'

The original advice was aimed at managers selling dramatically early at low valuations; taking some money off the table at a $100B round is a different act and not illogical

Scope: about partial sales, not selling the whole position; assumes the sale is into a genuinely high round

13:48 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Harry Stebbings · Jun 19, 2024

Selling 100% of a position is the wrong approach; you should sell around 80% and retain 20% to ride the upside in case you are wrong

Keeping a residual stake preserves exposure if your negative view turns out to be mistaken

35:53 20VC: Foundation Models are the Fastest Depreciating Asset in History, Lina Kahn is a Threat to American Capitalism, PE is Not Coming to Save the M&A Market & How China Could Overtake the US in the AI Race with Michael Eisenberg

Harry Stebbings · Jul 22, 2024

A seed investor sitting on an astronomical markup should sell a portion (e.g. 25% of the holding) and ride the rest, because almost no one regrets taking some off the table at a 300-400x

From a pure quantitative view holding is optimal, but selling a quarter at a 300-400x return locks in a huge outcome while still leaving 75% exposed to the upside

Scope: specific to entering at seed with an enormous multiple; concedes it is suboptimal on pure quantitative grounds

42:43 20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Harry Stebbings · Sep 16, 2024

Not taking cash off the table when he could have is one of his biggest regrets of the last few years

40:25 20VC: Index's Shardul Shah on Why Market Size is a Trap | Biggest Lessons on Pricing from Leading Rounds in Wiz & Datadog | Why Benchmarks & Averages in VC are BS | How Index Makes Decisions and Why Growth & Early are the Same Investing Style

Mike Maples · Jan 6, 2025

Both can be true: a winner can ride far higher than expected AND be valued to perfection at 100x, so the answer is to sell some while retaining enough stock to benefit from further upside

100-baggers are rare (he tracks roughly a hundred exited ones over twenty years), and a company can be valued to absolute perfection even if it is excellent, so you want exposure to the Singerman outcome without betting everything on it

Scope: applies when already ~100x in the money in about five years

31:01 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Harry Stebbings · Nov 15, 2023

Investors who get in early should take some money off the table once prices get high enough, regardless of how well the company is doing or who is joining rounds

Trajectory and round quality are not sufficient reasons to hold; you should actively manage a portfolio rather than be a passive investor

Scope: applies when you entered early enough and valuations are high

75:25 20VC: How to Survive and Thrive in a World of OpenAI, Are LLMs Being Commoditised, Where Does the Value Lie; Infrastructure or Application Layer, How Apple Could Win in a World of AI, How Amazon Could Threaten OpenAI and Why Google Struggle with Des Trayn

David Frankel · Oct 14, 2024

When there is insane heat and a company is valued at a billion on $40-50M of unprofitable revenue, it is an ideal moment for early investors and founders to take some money off the table

The valuation is disconnected from the fundamentals, and heat creates leftover room in the round to sell into

Scope: you only know whether you were right in the rearview mirror; they have gotten this wrong as well as right

59:09 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Mike Maples · Jan 6, 2025

Seed funds can make money not just on entry price inefficiency but by arbitraging exit price inefficiency — selling secondary into high private marks, as Floodgate did with Lyft at ~$25/share in 2015 to return the fund — an option large funds lack due to signaling and scale

There is so much capital that exciting companies get fully valued as if they're perfect for a very long time; with Lyft they were behind a $1.5B preference stack, competing with Travis Kalanick, and deep in the money, so selling to return the fund was the rational 'IQ test'

Scope: specific to seed funds where a sale can return the fund

26:40 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Mike Maples · Jan 6, 2025

The moment it's easiest to sell — a frothy oversubscribed up round where everyone wants in — is exactly when a seed fund should seriously consider selling, and it can be framed as a win-win for the founder

Founders are better off long-term with players like Fidelity on the cap table than a seed fund, and by the time the round comes together the founder is usually begging you to sell more because everyone becomes pigs and wants in

Scope: must be pre-agreed and non-transactional, not done on the fly; should only count if it's an 'initial liquidity event' with the same fund impact as an IPO

28:43 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

David Frankel · Aug 8, 2026

Very large, low-dilution rounds at extreme prices are only available to companies in the rarest air, and for an early investor they mainly represent an opportunity to sell a little of the position

At those numbers and that momentum, and given how early they came in, trimming makes sense

49:55 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Harry Stebbings · Jan 6, 2025

The best founders generally understand and accept a seed investor selling part of its stake

33:02 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Mitchell Green · Mar 7, 2026

Selling secondary does not make you unattractive to founders as long as you genuinely help them and keep helping after you sell

Founders value people who do what they say they will do; if you helped them recruit and win customers, selling 20% doesn't matter

37:33 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Josh Browder · May 18, 2026 · hedged

Selling a small portion of a large stake carries little signaling risk and can actively help founders

The investor retains most of their position, and oversubscribed rounds mean founders often want the room to bring in a strategic new name

Scope: 'it depends'; only for a small part of one stake

71:48 20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Will Quist · Sep 12, 2022

Investors should never mentally be in 'hold' mode on a position — you are either a buyer or you should be actively building a framework for selling

Selling is emotionally, intellectually and structurally hard in illiquid assets, so sitting in hold and then reacting when things turn is extremely difficult; better to have a pre-built mental framework you can apply consistently over 'a thousand hands of blackjack'

Scope: you may not have the capital or the right cost of capital to actually keep buying; being a mental seller doesn't mean selling tomorrow or even in three years

32:11 20VC: Why 95% of Venture Capital is Not Really "Venture Capital" | The Five Core Levers Needed To Assess Risk and Price a Startup | The Future of Venture; Who Wins, Who Loses, What Happens to the Crossover Funds with Will Quist, Partner @ Slow Ventures

Satya Patel · Jan 30, 2023

The selling decision should be a standing question of whether you're a buyer or seller today — sell unless you honestly believe at least 5-10x remains from the current price

You're a buyer when risk-adjusted return exceeds your return expectation and a seller when it doesn't; investors should ask whether there is genuine upside or whether it just feels good to still be in a company you caught early

40:29 20VC: Homebrew's Hunter Walk and Satya Patel on Why $100M is Not Enough To Execute a Seed Strategy Today | Why They Decided not to Raise New External Funds | Where Are We in the Cycle & What is Truly F***** | Why Founders Should Take Secondaries Earlier

Mike Maples · Jan 6, 2025

Seed funds should only sell secondary in full cooperation with the founder, framed well in advance as a win for the company, never opportunistically on the day a round closes

Founders accept it if they aren't surprised and you aren't greedy or transactional; you can pitch it as bringing a better long-term investor onto the cap table without massive dilution

32:28 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Miles Clements · Mar 9, 2026

Investor decisions to sell secondary should be driven first by what is best for the company and founder; where the company itself is running a tender, it is generally wise for investors to diversify

The company's interest comes first; within a company-sanctioned process, diversification is prudent

Scope: highly situational

44:58 20VC: Inside Accel's $4BN Growth Investing Machine | Cursor is Dead is Total BS: Here is Why | What Missing Rippling and ElevenLabs Taught Us | Are $2BN-$10BN IPOs Dead | Why Now is a Great Time to be Thoma Bravo with Miles Clements

Mike Maples · Jan 6, 2025

Seed funds are better positioned than multistage funds to make money on the sell, by a wide margin, but most seed managers are not sophisticated enough to exploit it

You can make money on the buy and on the sell; most seed managers only ask 'should I sell or not' instead of forming a fact-grounded opinion, which is why he collects data on 100-baggers

Scope: requires the seed manager to be far more sophisticated than most are

34:02 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Harry Stebbings · Aug 24, 2026

The secondary market is more liquid and more frothy than ever, letting smaller funds realize exuberant prices on a much shorter timeframe than a firm like Sequoia can

A smaller, less prominent fund can sell into that liquidity in a way Sequoia's position and size prevent

23:59 20VC: Inside Sequoia's Investment Committee: Lessons from Don Valentine, Doug Leone and Alfred Lin | How the SpaceX and Citadel Deals Went Down | What Sequoia Specifically Looks for in Founders with Julien Bek

Byron Deeter · Aug 25, 2025

The stigma against VCs selling secondary positions is wrong — mid-stage secondary liquidity is healthy and LPs deserve it now that companies stay private so long

Companies like Canva at $40B+, Anthropic at $170B+ and Perplexity aren't going public anytime soon, whereas historically a $50M ARR company could IPO; positions should be handed off to later-stage investors and hedge funds

Scope: a change in his own view — he was previously hard-lined against co-investors seeking early liquidity; especially important for emerging funds with DPI pressure; he always supported founders and teams taking pressure off

37:01 20VC: Do Margins Matter in AI? | Is Defensibility Gone For Good? | Is Vertical SaaS Dead in a World of AI | What SaaS Rules Are BS and No Longer Apply in a World of AI | The Future of Venture: Why Chanel vs Walmart is BS with Byron Deeter

Josh Browder · May 18, 2026

Secondaries are an increasingly important exit channel and small pre-seed/seed funds are structurally better placed to use them than large firms

A big firm like Menlo Ventures selling secondary sends a devastating signal that the company is dead, whereas a friendly seed investor selling doesn't; smaller fund sizes also mean secondaries can drive good outcomes

70:36 20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Oren Zeev · Feb 2, 2026

Selling a position early is justified only if you genuinely believe the remaining upside is small relative to the risk; otherwise managers do it to show DPI so they can raise their next fund

A 3x versus 4.5x spread means you only believed in 1.5x over three years with a lot of risk, which justifies selling; but managers who need DPI to raise will rationally give up upside to show it today

Scope: some individual positions can justify a sale

38:56 20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

Gokul Rajaram · Mar 16, 2026

If the go-forward IRR on a position is below what you promise your LPs, you are obligated to sell at least part of it

You owe LPs returns at the rate you underwrote, especially when a single asset will return a large chunk of the fund

Scope: especially when the asset would return 20-40% of the fund; sell a piece, not necessarily all

62:22 20VC: The 8 Moats of Enduring Software Companies: How to Analyse for Durability and Defensibility in a World of AI | Why Dropouts are "AI Maxing" the World & Remote Early-Stage Companies are Dying with Gokul Rajaram

Bill Gurley · Dec 6, 2021

Selling large private stakes early is not a realistic liquidity strategy for major shareholders in venture

Trying to offload half of a 20% position in a private round dramatically affects the price, and venture returns are concentrated in the home runs, so you'd need very strong conviction the price was wacky or the company couldn't go far

24:20 Selling large private stakes moves price too much to be a viable liquidity strategy

Michael Eisenberg · Dec 6, 2021

Selling secondary as a large stakeholder is reputation-negative and inconsistent with playing the long game with founders

Founders talk to each other, and taking money off the table for a small amount signals you aren't in it alongside them for the win

25:15 Selling secondary as a large stakeholder damages reputation and signals lack of commitment to founders

Hussein Kanji · Jan 20, 2025

Seed firms should not change how they operate because of secondaries — just build great companies, though taking some money off the table at a 50x offer can make sense

The same logic that would justify selling at 50x at IPO or a very late stage applies if the 50x arrives a year in; the timing doesn't change the reasoning

62:43 Seed funds shouldnt change strategy for secondaries but selling at a 50x offer makes sense

Jeff Seibert · Nov 22, 2023

Selling on the secondary market pre-IPO has been more successful for him than holding all the way through

His best outcome came via secondary, while a couple of early investments that IPO'd went almost to zero during the six-month lockup so he couldn't exit

41:41 Secondary sales pre ipo outperformed holding through lockup in his experience

Jeff Seibert · Nov 22, 2023

Market timing and getting in very early at a very low valuation are the key lessons for angels; taking some money off the table is often wiser than holding for paper markups that may be fake

In one deal he took a 3x cash return while the paper value went on to 10-15x, but he believes that valuation is fake and won't ever return the remainder

45:19 Take partial liquidity early since late paper markups may be fake

Nick Chirls · Sep 6, 2024

The right way to handle secondaries is strict alignment with the founder: only sell when the founder sells, almost always sell some alongside them, and never sell the whole position

Alignment plus trust makes the conversation possible — many investors are too terrified to even raise it — and partial liquidity is valuable to the fund and its LPs so they can keep doing what they do

49:51 Sell secondaries only in alignment with the founder selling alongside them and never liquidate the whole position

Harry Stebbings · Sep 6, 2024

An investor should not sell alongside a founder taking a small amount off the table for personal needs, if the investor believes in the business

Founders taking a million or two at the A for a home or school fees deserves support, and belief in the business argues against reducing your own position

50:51 Small founder personal liquidity should not trigger investor co selling

Miles Clements · Mar 9, 2026

Multistage funds should hold outlier founders through the public markets where the business has the mechanics to compound, but this cannot be applied as a blanket rule

The business is identifying outlier founders and multistage structure gives the flexibility to stay with them; not every company can compound for a long time

47:19 Hold through the public markets only where the business can compound

Byron Deeter · Aug 25, 2025 · hedged

Secondary transactions will incrementally become normalized — investors will stop reading signal risk into them — but dedicated private-market exchanges are less convincing

Crossover investors are getting more comfortable doing secondaries, which takes pressure out of the system and restarts capital flows

66:39 Secondary sales will normalize and stop carrying signal risk though dedicated exchanges remain unproven

Kevin Hartz · Jul 22, 2024

Whether to sell into a hot round depends on your own goals and time horizon, and there is real merit in letting winners ride and compound

Selling Facebook at its $10B Microsoft round would have looked smart at the time but the company is now worth hundreds of billions; young investors especially should let winners keep compounding

42:56 Decision to sell into a hot round depends on investor goals and time horizon

Harry Stebbings · May 6, 2022

Pricing today is so ridiculous that the right move is to sell secondaries and get out of as many early bets as possible, including average companies priced at $600M-$1B

25:27 Sell secondaries and exit average companies during overpriced markets

Jason Lemkin · Aug 9, 2023

Blocked from primary deals, growth investors are aggressively pursuing secondaries and cap-table cleanups instead

If they can't get their 15x from the company they'll buy it from early investors — his efficient portfolio companies north of $30M ARR are overwhelmed with approaches to buy out seed holders at the valuation the growth fund wants

50:31 Growth funds blocked from primary deals pursue secondaries and cap table cleanups instead

Des Traynor · Nov 15, 2023 · hedged

Taking secondary liquidity is especially the lesson for founders who write occasional angel checks, and is likely the bigger lesson to emerge from the 2019-2023 period

75:46 Founders with angel portfolios should actively take secondary liquidity on those positions

Harry Stebbings · Nov 15, 2023

Even if you're a founder by day, actively managing your angel portfolio is worth your time when millions of dollars are at stake

The sums involved justify the attention

75:56 Sums at stake justify active angel portfolio management despite day job

Oren Zeev · Feb 2, 2026

Proactively selling secondaries is a bad trade for a GP: anything you can sell requires a significant discount, and the positions buyers want are the ones you should keep

Buyers aren't stupid — they only buy what they believe can double or triple in two or three years, and if a position can do that, he'd rather hold it

37:39 Secondary buyers only want what you should keep and demand a discount

Eric Paley · Sep 20, 2023

On secondary sales you are necessarily wrong either way — wrong for taking it or wrong for not taking more — so once you accept being wrong, the decision is probably right

Advice given to him about the Uber secondary: the outcome will always make one side of the decision look mistaken

70:41 Secondary sale decisions are inherently second guessed either way so accept and proceed

Peter Singlehurst · Mar 19, 2025

Selling should be framed not as a binary decision but as an opportunity-cost trade-off, with private secondaries increasingly useful for trimming winners and recycling capital

Funding a new investment means finding capital, so you take it from where you have liquidity and where the return disparity between holding the existing company and the new opportunity is greatest

54:32 Selling is an opportunity cost tradeoff not a binary and secondaries enable recycling capital

David Frankel · Aug 8, 2026

Selling 20% of a position and turning out to be wrong is the best possible outcome — secondary timing is not a precise science

You keep the vast majority of the upside while banking liquidity, so being 'wrong' costs little

47:59 Selling a slice early costs little even if wrong

Jake Gibson · Jul 14, 2023

Telling founders you want to sell down your position is not a difficult conversation — founders understand an early investor reducing exposure after many years

Framing it as reducing position after years of investment lands fine, especially when there was excess demand for every round

28:54 Informing founders of an investor secondary sale is an easy conversation when demand exceeds supply

Terrence Rohan · Feb 5, 2024 · hedged

Secondaries will become a really robust liquidity option for early-stage investors

The secondary market has been steadily compounding — more LPs are willing to transact, more intermediaries are soliciting, and VC funds registering as RIAs lets them buy more common stock — and a contracting M&A market would push more volume there

54:32 Secondary market is becoming a robust liquidity option for early stage investors

Miles Dieffenbach · Aug 4, 2025 · hedged

Large institutions with real liquidity needs will be forced into venture strip sales, but there isn't enough secondary capital to absorb that NAV, so widespread selling would crush pricing

Secondaries are a supply-demand market with only so many buyers; if every billion-dollar endowment sells 10% of its venture book, pricing suffers

61:03 Insufficient secondary capital to absorb mass institutional selling

Adam Fisher · Jan 22, 2024

The right time to sell is just before a company peaks; you want to be the first to exit, roughly six months ahead of everyone else, just as in investing.

Signals include the business not working efficiently, the market being smaller than thought, spending not translating into growth, and competition compressing margins; if it's already peaked it's too late.

56:39 Sell just before the peak being first out beats waiting for maximum value

Julien Bek · Aug 24, 2026 · hedged

A $500M fund is already too large for secondary sales to meaningfully drive returns

That's a lot of money to try to return through secondaries at multiple

24:25 Fund size quickly caps secondaries as a return driver

Max Altman · Nov 21, 2025

The seed investor's job now includes spotting when the market is overhyped and taking money off the table at 100x rather than waiting for 200-300x

As a seed investor rather than growth investor, a 100x already delivers the fund; markets get inefficient and things get overvalued, so trading judgment is now part of the job

64:48 Sell into overhyped markets because 100x already returns a seed fund