Friday FUNDamentals: Liquidity Over Lock-Ups
Most people think about secondaries as just a way to buy into great companies at a discount. True — but the real unlock is more meaningful.
As an emerging fund manager, we negotiate secondary rights not only to buy, but to sell some or all of our holdings at any time. That creates two powerful outcomes for our LPs:
Liquidity → Venture is usually “set it and forget it” for a 5+ years.. We create the option to return capital much earlier.
Optionality → If a company goes from $5M to $50M, we don’t just wait for an IPO. We crystallize gains, recycle capital, and smooth the J-curve.
And here’s the part founders lean into:
I don’t love investors who block founders from taking a few hard-earned chips off the table along the way. Most of those investors were never founders themselves. They don’t know what it’s like living paycheck to paycheck, with everything tied up in equity and nothing liquid.
Allowing founders to take some chips off the table isn’t misaligned — it’s healthy. It improves their mental health because they’re no longer carrying the weight of day-to-day financial stress. When a founder isn’t worried about making thier mortgage payment, they can pour their full focus into building — scaling teams, driving sales, and executing with conviction.
And when we sell, it’s not hostile or behind anyone’s back. We usually give the company a ROFR (right of first refusal) — which simply means they get the first shot at buying those shares before anyone else. And most of the time, when we do sell, it’s to a strategic partner — someone who brings additional value to the cap table. That way, our exit creates liquidity for LPs while strengthening the company’s long-term position.
We’re founders first, investors second. We believe aligned, energized, financially secure founders build the most enduring companies.
Secondaries aren’t just about buying smart. They’re about creating alignment, liquidity, and freedom — for LPs and for founders.
Multiples over mulligans. Liquidity over lock-ups.