Employees Sell at a Discount

This pricing gap shows that private market liquidity is not one market, it is a hierarchy, and employees sit at the bottom. Founders and investors more often sell in one off or company approved processes where price is anchored to the last round, while employees usually show up in broader tender offers where the buyer has more leverage, the stock is common not preferred, and sellers are more likely to need cash for taxes, exercise costs, or life events.

• The dataset shows the pattern clearly. In 64 tender offers totaling more than $3B, 83% priced at or below the last round, employee participation averaged 37%, and employees sold at lower prices than founders and investors across all secondary sales.
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• Timing matters as much as price. Investors dominate secondary sales early, more than 70% of transactions below $21M post money, while 75% of employee transactions happen only after companies exceed $160M. By then the stock is less scarce and usually commands less premium.
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• Market structure reinforces the gap. Company run tenders are usually closed door processes with an existing investor or a small buyer set, and the price is often pegged to the last primary round for convenience. More frequent auctions and recurring liquidity windows can reduce employee desperation and improve price discovery.
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The next step for the market is moving from episodic tenders to recurring, more competitive liquidity programs. As companies stay private longer, the winners will be the ones that let employees sell smaller amounts more often, because predictable liquidity should narrow the employee discount, improve recruiting, and make private share prices look more like a real market price.