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Secondary shares

What are secondary shares?

Secondary shares refer to shares in a company that are sold by existing shareholders (like early employees or investors) rather than by the company itself. This process allows early stakeholders to monetize their equity stakes without the company needing to go public or be acquired.

Secondary sales can happen at any stage, but they're especially common during later funding rounds when the company's valuation is significantly higher than in earlier rounds. They're a way for early investors and employees to realize a return on their investment or compensation. However, these transactions need to be handled carefully, as they can affect the company's capitalization table and potentially cause legal or perception issues.

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