Startup Employees Are Finally Cashing In

$5 billion. That's what Clay told its employees their stock was worth last week—a 60% jump from just four months earlier. For the second time in eight months, the AI sales automation startup opened its doors for employees to convert some of their paper wealth into cold, hard cash.

Clay isn't alone in this new trend. A wave of fast-growing startups has been offering "tender offers"—opportunities for employees to sell their shares before an IPO. Linear completed one at its $1.25 billion Series C valuation. ElevenLabs authorized a $100 million secondary sale at a $6.6 billion valuation, double its previous value. The common thread? These aren't just benefiting founders—they're designed for employees.

A Different Game Than 2021

At first glance, this might look like the premature cash-outs of the 2021 bubble. Remember Hopin? Its founder reportedly sold $195 million worth of stock just two years before the company's assets were sold for a fraction of its peak $7.7 billion valuation.

But there's a crucial difference. During the zero-interest-rate era, secondary deals primarily provided liquidity to founders of buzzy companies. Today's transactions are structured as employee-wide tender offers. As Clay co-founder Kareem Amin put it, the goal is ensuring "the gains don't just accumulate to a few people."

While investors largely frown upon the outsized founder payouts of 2021, they view the current shift toward employee-focused tender offers far more favorably.

The New Talent Weapon

Why are startups embracing this approach? Simple: the talent war has intensified as companies stay private longer. Fast-growing AI startups risk losing their best people to public companies or mature startups like OpenAI and SpaceX, which regularly offer tender sales.

"A little liquidity is healthy, and we've certainly seen that across the ecosystem," said Nick Bunick, a partner at secondary-focused VC firm NewView Capital. "We've done a lot of tenders, and I haven't seen any drawbacks yet."

For startups competing for top talent, offering early liquidity has become a powerful tool for recruiting, morale, and retention. It's a way to make those stock options feel real before the uncertain timeline of an IPO.

The Unintended Consequences

But this trend isn't without potential downsides. Ken Sawyer, co-founder of secondary firm Saint Capital, points to second-order effects that could reshape the venture ecosystem.

"It is very positive for employees, of course," he said. "But it enables companies to stay private longer, reducing liquidity for venture investors, which is a challenge for LPs."

Here's the concern: if tender offers become a long-term substitute for IPOs, it could create a vicious cycle. Limited partners who don't see cash returns become reluctant to back VC firms, which then have less capital to invest in startups. The very mechanism designed to help employees could inadvertently starve the ecosystem of fresh capital.

The Liquidity Paradox

This raises fundamental questions about the venture model. If companies can provide employee liquidity without going public, what incentives remain for IPOs? And if VCs can't return cash to their LPs through traditional exits, how does the funding cycle continue?

The answer likely lies in balance. Some liquidity for employees is clearly beneficial—it democratizes startup wealth and helps with retention. But it can't completely replace the discipline and transparency that come with public markets.