Secondary Markets

Definition

Platforms where employees and early shareholders can sell restricted private stock before IPO, giving insiders a chance to diversify while theoretically validating company valuation.

Example Usage

The secondary market deal let me sell $500K of my founder equity at our Series C valuation, turning paper wealth into actual wealth before we inevitably crashed.

Origin

From securities market terminology

Fun Fact

Secondary market valuations are often lower than VC rounds, a fact that venture capitalists hope founders don't notice

Source: Private securities and venture capital terminology

Related Terms

Intermediate

dragalong rights

A provision forcing minority shareholders to join a sale if majority shareholders approve it, preventing holdouts from blocking acquisitions. Democracy dies in shareholder agreements.

🚀 Startup / VC

Advanced

carve-out

Reserved portion of an acquisition's proceeds specifically allocated to employees or specific shareholders, ensuring they benefit even if the waterfall would otherwise drown them. Exit sharing mandated by negotiation or generosity.

🚀 Startup / VC

Beginner

graybeard

An experienced entrepreneur or advisor, typically older, who's seen multiple technology cycles and startup failures. They provide wisdom, pattern recognition, and constant reminders that everything has been tried before.

🚀 Startup / VC

Intermediate

party round

A funding round with so many small investors that the cap table looks like a nightclub guest list—lots of names, minimal commitment from anyone. Usually signals either a hot deal everyone wants a piece of, or a desperate founder who couldn't land a lead investor.

🚀 Startup / VC

Beginner

Bootstrapping

Building a company using nothing but your own savings, credit cards, and an alarming tolerance for ramen noodles. It's the startup equivalent of performing surgery on yourself -- theoretically possible, but everyone watching is deeply uncomfortable.

🚀 Startup / VC

Advanced

j-curve

The pattern where a venture fund initially shows negative returns as it deploys capital and pays fees, before (hopefully) shooting upward when investments exit. A graph that looks like the letter J, assuming your fund doesn't remain in the vertical downstroke forever.

🚀 Startup / VC

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