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Comment by muzz | Hacker News Reader

Isn't there a secondary market for the shares?

Also, if/when a company has too many shareholders it has to release it's financials to the public, and at that point it might as well be public. Facebook faced this issue in 2012, although not sure if the law has changed since then.

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> a secondary market for the shares

Only for Stripe’s investors, founders and early executives.

No. Hardly any startup allows common employees to sell options on the secondary market

It's worked for me, and I know there was a pretty healthy secondary market for some of the big tech unicorns before they went public. I sold pre-market shares in a large education startup about a year before IPO, at about 50% of the IPO price, so it was a loser for me and a win for the investor in Cypress that bought the shares.

I think you were the exception though; I've never seen a start-up up close that allows you to trade or even pledge your equity for any purposes.

Yes; the idea is that the startup wants control for who will be on the cap table, so they don't hassle with written requests for info etcetera. Minority shareholders (especially for California businesses) have a fair number of information rights, and so companies tread cautiously in terms of who they allow to invest. This is in part why special purposes vehicles exist so that there's a point of contact for investment. (And then the company doesn't have to vet people that invest in that syndication as much...)

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