A secondary sale is a transaction where existing shareholders sell their shares to new or existing investors without the company itself raising new capital. Also called a secondary transaction, it covers founders, employees, and early investors and provides partial liquidity pre-exit while resetting the cap table without a financing event. It is distinct from a primary sale (where new shares are issued and the company receives the capital) and has become an increasingly common, sometimes-essential liquidity path for startups staying private longer.
The major secondary structures: founder secondaries (founders sell a portion of their stake, usually capped at 5 to 15 percent of holdings, common at Series B and beyond when compa...