When a General Partner offers a GP-led secondary, they shift the crucial decision of when to sell an asset from themselves—the expert—to the Limited Partner. This undermines a core tenet of the LP-GP relationship, as LPs lack the deep asset-level knowledge to make an informed sell-or-hold decision.

Contrary to the idea that all capital is good capital, elite founders strongly dislike SPVs. They want to know exactly who is on their cap table and view SPVs as a risky, obfuscated way to assemble capital that compromises control.

Anduril's COO highlights a dangerous trend of "wildcat" secondary market brokers selling access to company shares they don't possess. These deals often involve multiple layers of SPVs with hidden fees. He warns that many retail investors will discover their shares don't exist during a major IPO, leading to significant financial losses.

The trend of allowing employees to sell shares in secondary transactions before investors get liquidity is a problem. Lior Susan argues this creates a fundamental misalignment, as historically, employees and investors realized returns at the same time. The system needs rethinking for long-duration private companies.

Founders largely dislike Special Purpose Vehicles (SPVs) because they mask the true identity of investors on their capitalization table. This lack of transparency is seen as a risk, leading companies like Anduril to actively combat what they call "SPV hucksters."

Vested works directly with employees because startups find small, one-off secondary transactions burdensome due to legal fees and cap table complexity. However, this dynamic inverts at scale. Once Vested facilitates millions in transactions for a single company's stock, the startup has a strong incentive to partner on a formal liquidity program.

Matt Grimm of Anduril highlights that many secondary share offerings are structured as "forward contracts," which he calls notoriously hard to settle and explicitly disallowed by his company's bylaws. This means investors in such SPVs face extreme counterparty risk and may never actually take possession of the shares.

Vested neutralizes non-delivery risk, a major concern in private markets. By funding exercises, they ensure the employee retains a majority of their stock, aligning incentives. Small deal sizes ($50k-$100k) make it economically irrational for an employee to default and ruin their reputation, leading to a 100% delivery rate.

The number of founders taking secondary liquidity after their seed round is twice as high as the 2021 peak. While this de-risks the journey for founders, there is almost no parallel liquidity offered to early employees, creating a growing divide in early-stage risk and reward.