{"id":286546,"date":"2026-02-08T01:34:08","date_gmt":"2026-02-08T01:34:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/286546\/"},"modified":"2026-02-08T01:34:08","modified_gmt":"2026-02-08T01:34:08","slug":"secondary-sales-shift-from-founder-windfalls-to-employee-retention-tools","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/286546\/","title":{"rendered":"Secondary sales shift from founder windfalls to employee-retention tools"},"content":{"rendered":"

In May, AI sales automation startup Clay said it was allowing most of its employees to sell some of their shares at a\u00a0$1.5 billion valuation<\/a>. Coming just months after its Series B, Clay\u2019s offer of liquidity was a rarity in a market where tender offers, as these types of secondary transactions are known, were still uncommon for relatively young companies.<\/p>\n

Since then, several other newer, fast-growing startups have allowed their staff to convert some of their stock into cash. Linear, a six-year-old AI-powered Atlassian rival, completed a tender offer<\/a> at the same valuation as the company\u2019s $1.25 billion Series C. More recently, the three-year-old ElevenLabs authorized a $100 million secondary sale for staff, at a valuation of $6.6 billion<\/a>, double<\/a> its previous value.<\/p>\n

And just last week, Clay, which has tripled its annual recurring revenue (ARR) to $100 million in one year, decided it was again time for its employees to cash in on the company\u2019s fast growth. The eight-year-old startup announced that its staff can sell stock at a valuation of $5 billion<\/a>, a more than 60% increase from its $3.1 billion<\/a> valuation announced in August.<\/p>\n

These secondary sales at increasingly higher valuations for young, perhaps still-unproven companies may initially appear to be a premature \u201ccash-out\u201d reminiscent of the 2021 bubble. The most infamous example of that time was Hopin, whose founder, Johnny Boufarhat, reportedly sold $195 million worth of his company\u2019s stock just two years before the company\u2019s assets were sold for a tiny fraction<\/a> of its peak $7.7 billion<\/a> valuation.<\/p>\n

But there is a critical distinction between the 2021 boom and today\u2019s market.<\/p>\n

During the ZIRP era, a large portion of the secondary deals provided liquidity almost exclusively to founders of buzzy companies like Hopin. In contrast, the recent transactions from Clay, Linear, and ElevenLabs are structured as tender offers that also benefit employees.<\/p>\n

While investors these days largely frown upon the outsized founder payouts of the 2021 boom, the current shift toward employee-wide tender offers is viewed far more favorably.<\/p>\n

Techcrunch event<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\tJune 23, 2026\n\t\t\t\t\t\t\t<\/p>\n

\u201cWe\u2019ve done a lot of tenders, and I haven\u2019t seen any drawbacks yet,\u201d Nick Bunick, a partner at the secondary-focused VC firm NewView Capital, told TechCrunch.<\/p>\n

As companies stay private longer and talent competition intensifies, allowing employees to turn some of their paper gains into cash can be a powerful tool for recruiting, morale, and retention, he said. \u201cA little liquidity is healthy, and we\u2019ve certainly seen that across the ecosystem.\u201d<\/p>\n

At the time of Clay\u2019s first tender offer, co-founder Kareem Amin told TechCrunch<\/a> that the main reason for giving employees a chance to cash out some of their otherwise-illiquid stock was to ensure that \u201cthe gains don\u2019t just accumulate to a few people.\u201d \u00a0<\/p>\n

Some fast-growing AI startups are realizing that without offering early liquidity, they risk losing their best talent to public companies or more mature startups like OpenAI and SpaceX, which regularly offer tender sales.<\/p>\n

While it\u2019s hard not to see the positive aspects of allowing startup employees to reap cash rewards from their hard work, Ken Sawyer, co-founder and managing partner at secondary firm Saints Capital, pointed to unintended second-order effects of employee tenders. \u201cIt is very positive for employees, of course,\u201d he said. \u201cBut it enables companies to stay private longer, reducing liquidity for venture investors, which is a challenge for LPs.\u201d<\/p>\n

In other words, relying on tenders as a long-term substitute for IPOs could create a vicious cycle for the venture ecosystem. If limited partners don\u2019t see cash returns, they will be more reluctant to back the very VC firms that invest in startups.<\/p>\n","protected":false},"excerpt":{"rendered":"In May, AI sales automation startup Clay said it was allowing most of its employees to sell some…\n","protected":false},"author":2,"featured_media":286547,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[72,73706,93671,191,137625,61,60,41611,137626],"class_list":{"0":"post-286546","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-entrepreneurship","8":"tag-business","9":"tag-clay","10":"tag-elevenlabs","11":"tag-entrepreneurship","12":"tag-hopin","13":"tag-ie","14":"tag-ireland","15":"tag-liquidity","16":"tag-secondaries"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/286546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=286546"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/286546\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/286547"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=286546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=286546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=286546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}