How Much Should a Founder Sell?

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In Uber, Airbnb and Facebook most famously I think back in the day, Facebook kind of got forced to go public at a certain point. They just had so many investors it was causing some agito with the SEC where there's a certain number of people you can have in a private company. But Yuri Milner very famously did a blended deal in Facebook I believe where he bought some secondary and a bit of a discount and then paid a very high price for the primary shares the preferred shares in Facebook. So on the buy side you can and this I think Masayoshi San did the same thing he paid a certain amount for preferred shares in Uber and then he paid some of us with existing

Today’s show:

Wilson Sonsini Partner Becki DeGraw joins Jason to kick off another series of Startup Legal Basics! In this episode, they break down secondary market transactions, including the evolution of secondaries (00:50), trends in the industry (3:16), critical aspects of Qualified Small Business (QSBS) stock(20:06), and much more!

Time stamps:

(00:00) Wilson Sonsini Partner Becki DeGraw joins Jason (00:50) The increased use of secondary markets (3:16) How companies staying private longer influenced the rise in secondaries (4:25) Determining how much founders should be allowed to sell (6:21) Spending more than a company is worth (9:26) The Pari-Passu concept explained and how it applies to early investors, founders, and employees (10:38) Who gets to sell pre-IPO (12:44) Off the cap table transactions and hypothetical scenarios (18:26) Tender offers and the NASDAQ secondary market (20:06) The critical aspects of qualified small business (QSBS) stock

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