Let Your Team Sell Shares Before Going Public

Secondary rounds for founders are standard practice. By the time a company reaches its B or C round, founders have typically been grinding for five-plus years. They're sitting on shares worth tens or hundreds of millions of dollars on paper — and most investors understand that letting them take some money off the table reduces burnout and keeps them committed for the long run.

That logic is correct. But it only applies to founders.

The team that helped build the company to that point — the engineers, the salespeople, the operators who scaled from ten people to two hundred — they're sitting on the same paper gains with the same locked-up equity and no way to access it until an IPO that might be years away.

At BenchSci, when we raised our Series C, we decided to change that. We offered an employee secondary to our entire team — every BenchScier with vested shares got the opportunity to sell 10% of them. Most participated. The gratitude was real.

Not enough companies do this. Here's why they should — and exactly how we did it.

Why it matters

The practical case is straightforward.

It helps you compete for talent. The market for tech talent is intensely competitive. Public companies offer liquid stock. A private company's equity is paper — and experienced candidates know it. Offering a secondary program changes that conversation. Your equity isn't just a future promise anymore.

It increases retention. When employees can periodically realize some value from their shares, staying becomes more tangible. Abstract long-term upside is harder to hold onto than money you've actually received. If you build employee secondaries into every significant fundraise, you create a recurring reason to stay.

It makes equity real. Options that won't pay out for a decade can feel theoretical — especially for team members who joined after the early days and can't fully visualize the exit. Letting people actually sell shares turns that abstraction into something concrete. It signals that the equity you granted them is worth something today, not just someday.

The harder argument is the simple one: founders don't build companies alone. If you genuinely believe your team made this possible, let them share in it.

How to actually do it

There are two parts: getting it into the fundraise, and executing it with your team.

Getting it into the term sheet

Start by aligning internally on how much you want to offer. We landed on 10% of vested shares — meaning every eligible BenchScier could sell up to 10% of what they'd earned. We ran the math, presented it to the board, and got support quickly.

The key to making a secondary work is creating enough demand in the fundraise to cover both the primary investment and the secondary amount. Run a proper fundraising process, create competition, and make sure investors want in badly enough that adding a few million in secondary doesn't threaten the round.

Here's what surprised us: when we went out to raise, almost every investor proactively asked if we were offering a secondary. The market had moved. It's becoming an expectation at C stage. We said yes, shared the 10% number, and everyone agreed. Once you have a term sheet, insist the secondary is explicitly included in it.

Communicating to your team

This part matters more than most founders expect. You'd think employees would jump at the chance to sell shares. In practice, how you communicate it determines whether they actually participate.

We announced our C round to 200+ BenchSciers at our end-of-year event and told them we were going to share our success with all of them. The reaction was immediate and genuine.

Our lawyers warned us that statistically, most eligible employees choose not to sell — often because they think it's a loyalty test. We addressed that directly and explicitly: this is not a test, we want you to participate, we want you to benefit from what you've helped build.

From there, the operational process was detailed but straightforward:

We sent a formal communication to every eligible BenchScier with a full overview — timeline, deadlines, how much they could sell, financial results, legal terms, and a clear calculation of their potential proceeds.

We built out supporting resources explaining what a secondary offering is and how it works, with answers to the most common questions.

Our finance team hosted multiple information sessions and offered one-on-one meetings for anyone who wanted to talk through the specifics.

We circulated a Google Form to collect participation interest, then worked with lawyers to prepare purchase agreements for everyone who opted in.

The closing process required every participant to sign their agreement before the transaction could complete — which meant a lot of follow-up. It also required existing investors to purchase an offsetting amount of equity to complete the secondary transaction on their side.

After all agreements were signed, we processed payments through a special payroll run, handled the tax deductions, and delivered the proceeds.

Yes, it was a lot of work. But most eligible employees participated. The gratitude was real and lasting. And we set a precedent we intend to maintain.

Founders take secondaries. That's accepted. But the team that built the company with you is waiting for a payday that might never come — or might come fifteen years after they joined.

You don't have to make them wait that long. And if you have the ability to let them taste what they've helped create, the question isn't whether it's worth the operational effort.

The question is why you wouldn't.