>> Founders cashing out is a big red flag. No, it's not. Palihapitiya agreed that there should be a secondary component to the financing. When a company is "

>> Founders cashing out is a big red flag. No, it's not. Palihapitiya agreed that there should be a secondary component to the financing. When a company is "shooting for the moon" and has a chance at a >$1B exit, investors want the entrepreneurs to cash out a portion of their stock, because it gives them the financially flexibility to swing for the fences. It aligns the founders and management team with the late-stage investors. Fred Wilson does a great job explaining why founders and early investors cashing out in late-stage financings is a Good Thing for everyone. http://www.avc.com/a_vc/2010/01/the-tug-of-war-between-ma-and-vc.html http://www.avc.com/a_vc/2010/01/the-tug-of-war-between-ma-an... http://www.avc.com/a_vc/2010/08/angel-liquidity.html http://www.avc.com/a_vc/2010/08/angel-liquidity.html