Top private companies like SpaceX run regular tender offers, allowing employees to sell vested stock. This provides predictable liquidity, effectively competing with the quarterly RSU payouts offered by public tech giants without the market volatility.
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ElevenLabs raised a $100M round entirely for employee secondaries. The CEO's rationale is that by allowing early team members to de-risk and realize financial gains, it solidifies their commitment to the company's multi-year mission rather than creating pressure for a quick exit.
Similar to the short-lived direct listing wave, the idea of staying private indefinitely will likely only apply to a handful of elite, capital-rich companies like SpaceX. The vast majority of successful startups will still follow the traditional IPO path to provide liquidity and access public markets.
The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.
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.
SpaceX's regular tender offers provide employees with life-changing liquidity, creating a powerful incentive that rival Blue Origin lacks. This 'unfair advantage' in compensation structure is crucial in the long-term war for elite aerospace talent, going beyond just salary.
Top companies like Stripe or SpaceX can stay private forever by using robust secondary markets to provide liquidity to employees and investors. This allows them to focus on long-term growth without the burdens of public company reporting and quarterly profit pressures.
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.
Beyond its technical lead, SpaceX holds a key recruiting advantage over rivals like Blue Origin by offering regular tender offers. This provides employees with consistent, tangible liquidity for their stock options, making compensation feel more valuable and attracting top talent.
For trillion-dollar private companies like SpaceX going public, the traditional 90-180 day lockup period is inadequate. The massive volume of insider shares hitting the market at once could crash the stock. Investment bankers are now designing staggered lockup releases to manage this unprecedented liquidity event.
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.