Secondaries and Buybacks Signal Strength
Arjun Sethi, co-founder of Tribe Capital, on investor allocation strategies and democratizing access to capital
Frequent secondaries and buybacks are a sign of strength, not weakness. The companies growing fastest create the most paper wealth for employees and early investors, and that creates the sharpest need to turn some of that paper into cash. In practice, liquidity lets a late stage company keep key people, clear out stale cap table slots, and bring in larger investors without issuing as many new shares.
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The pattern shows up because private companies now stay private much longer. That means employees can spend 10 to 12 years holding stock they cannot easily sell, while early VCs also need to return cash to LPs. The best companies feel this pressure most because their equity has appreciated the most.
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Liquidity is not just employee friendly, it is a cap table management tool. A secondary lets an early employee, angel, or seed fund sell part of a stake, while a new crossover or growth investor takes that place. The company gets a more useful ownership base without the dilution of a full primary round.
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Tender data shows why the strongest companies keep searching for better liquidity mechanisms. Most tenders have been priced at or below the last round, which suppresses participation, especially from employees. That pushes companies toward more frequent, more structured liquidity programs that improve price discovery and make equity feel closer to real compensation.
The market is heading toward private companies behaving more like lightly traded public companies before IPO. The winners will be the late stage companies that pair rapid growth with recurring, issuer controlled liquidity, because that combination makes their stock a stronger recruiting tool, a cleaner cap table asset, and a more flexible source of capital over time.