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This is a really interesting phenomenon. There is crazy irrational illiquidity on mid/late-stage startup equity. Right now the conventional wisdom is that it's
by frisco 8y ago
This is a really interesting phenomenon. There is crazy irrational illiquidity on mid/late-stage startup equity. Right now the conventional wisdom is that it's better to go to Google & co because startup equity is all flickers on a wall because you can't sell. I bet in 5 years there will be a thriving private market for mid-stage company common and junior preferred.
I'd be really interested in to learn more about which "unicorn" you hold stock in and whether you're interested in selling some (as you seem to imply). I've been thinking a while about buying this type of thing (or even setting up a fund to do it). I think there is a lot of value to be had in providing liquidity to employees of these types of companies. There are a few reasons this isn't done much today, but I'm 95% sure they can be overcome. My email is in my profile if you're interested.
- gammateam 8y ago"right of first refusal" prevents a burgeoning secondary market from forming but yes, there is ESO Fund and other companies which you can basically become a debtor to in the event that you become liquid. you get cash and also get to potentially share in the upside.
- frisco 8y agoThere are a bunch of hurdles to clear: the ROFR, usually a co-sale agreement, there may even just be outright restrictions on transfer. But these can usually be worked through by simply talking to the company. If they want to exercise their ROFR, cool, the employee still gets liquidity. If others want to co-sell, I might buy more or you might have to prorate. Transfer restrictions are usually just about the company not wanting a ton of randos on their cap table they don't know, and can often be talked through.