The research is clear, companies are stalling IPOs and staying private for longer than ever before.
In 2014, the average startup went public after spending 6.9 years in the private market, according to data from research company Morningstar Indexes and PitchBook. By 2024, this had risen to 11 years.
This global phenomenon has real impacts for employees who are waiting much longer to cash in their companies shares, typically sold during a traditional IPO or M&A. This creates a challenge for founders to keep their employees motivated and retain them for longer.
This has led to the rise in regular secondary share sales — liquidity events where employees and early investors can sell their privately held company shares to new buyers.
Unlike a primary funding round, in which a startup issues new shares to raise money for the company itself, a secondary sale allows employees to sell existing equity.
As employee equity evolves, secondary sales are becoming a critical tool. They allow long-standing employees to access paper wealth without needing the company to go public or sell itself prematurely.
In interviews with Sifted, experts shared how companies can execute a secondary share sale successfully.
Turning paper equity into reward
As companies stay private longer, employee wealth often remains on paper without a public market to sell shares, meaning employees holding equity in stocks and shares can’t convert them into real cash.
This can lead to what Matt Cooper, co-CEO at private market investment platform Crowdcube describes as “lock-in fatigue, where individuals are performing well and creating value for the company but are not getting the chance to realise some of the paper value they’re creating.”
You've seen the likes of Monzo, Revolut and GoCardless. This is going to be much more normalised than just waiting out for an IPO.
When employees wait for an IPO that may never arrive, the promise of equity can lead to financial stress rather than motivation, says Karen Kerrigan, chief operating officer at wealth management platform Moneybox. “The money is on paper until you can actually deliver liquidity."
Cooper echoes this sentiment, adding that “equity wealth feels a bit abstract unless you can start to access it.” Offering a structured secondary shares sale provides “tangible recognition of employee dedication and their work in driving value.”
Many large private companies, such as Revolut, Stripe and OpenAI, are making regular secondary sales a core part of their compensation strategy.
Cooper calls this a “secondaries arms race.” He says: “The more businesses that are explicit about their approach to employee liquidity, the more [others] will be forced into doing it as well.”
In the near future, he believes regular liquidity will go from a company perk to a “baseline expectation” of employees of growth stage companies.
Some founders worry that if they allow a share sale, their top performers will cash out and leave. However, in reality, structured liquidity programmes are tailored to reward long-standing employees and keep them engaged rather than looking for other opportunities.
Reflecting on Moneybox's recent £45m secondary share sale, Kerrigan says, “This is about recognising and rewarding long serving employees and giving them the opportunity to realise some of the value they’ve helped create. Many of these people have been with the business for up to 10 years, and have worked incredibly hard”
Moneybox also set specific eligibility criteria for employees who could sell shares, such as a limit on who could sell, how long they must be at the company and what percentage of their shares they could sell.
The money is on paper until you can actually deliver liquidity.
Providing access to liquidity “transforms the relationship between the employer and the employee,” says Cooper. “It moves it from being transactional to recognising the true value that employee has delivered for the business.”
The evolution of private markets
The prolonged period of staying private has traditionally forced founders into a corner, leaving them with limited options to generate liquidity. These options previously included a one-off bilateral block trade — a custom-negotiated deal where chunks of shares are sold directly from one seller to a single buyer.
Another option was a forced trade sale where a company is pressured into selling the entire business prematurely to provide an exit for early backers.
To help address this challenge, the London Stock Exchange launched the Private Securities Market (PSM), a new venue designed to provide private companies with access to intermittent liquidity auctions leveraging the Exchange’s public markets infrastructure.
The market, built on HM Treasury's PISCES framework, allows private companies to run structured secondary share sales, expanding the options available for employees and early investors to sell shares in advance of any IPO and without needing a company sale.
Crowdcube is a Registered Auction Agent on the market, facilitating both the buy - bringing in new investors - and sell - managing the sale of multiple employee holdings - side of transactions. The company has partnered with LSE on the employee secondary sales of Moneybox and Wayve.
The objective of the market is separating the “concept of liquidity from the idea that it has to be linked to a full exit,” says Cooper.
Private companies now “operate much like public companies do,” adds Charlie Walker, deputy CEO of the LSE, with larger cap tables of individual shareholders, more capital raised, and stricter internal governance.
Through the Private Securities Market, businesses can retain control over when liquidity events take place, who can participate, how many shares can be sold and within what pricing parameters while continuing to operate as private companies.
Realities of employee liquidity
Executing a secondary share sale can feel daunting for a lot of founders because the process often involves manual admin, including drafting individual price negotiations and bespoke legal contracts.
Crowdcube and the London Stock Exchange use a standardised infrastructure for businesses to sell secondary shares.
“Crowdcube acts as a single end-to-end execution layer. From the first communication an employee or a potential seller gets to the money in the bank account, it’s handled by us and PISCES,” says Cooper.
We have a tendency to sell our businesses rather than scale them.
All employees get a dashboard of the different shares (such as EMI and ESOP) they’ve earned over time at a company, he adds. If they want to cash out, they can drag the shares they want into a sell order on the dashboard. The same technology is available to use by any selling shareholder.
“All documents will be signed and witnessed within the platform and it will be us sending the proceeds from the secondary sale,” he says.
“Any sophisticated investor who can buy a share in a public company listed on the London Stock Exchange will be able to buy a share in a private company,” adds Walker. “We run the auction for a day and the shares cross in the same way they would do for a public share, while remaining private.”
But founders shouldn’t underestimate the internal effort required for a secondary shares sale including aligning the board, setting parameters, and communicating with employees, says Kerrigan.
“I would say it's the same level of work that has been for every transaction we've done before,” she says.
Kerrigan predicts secondary share sales are going to become more widespread — and Crowdcube's pipeline has shown this.
The company recently announced a secondary trade through the Private Securities Market with the LSE for background screening company Veremark. Crowdcube also has a pipeline of PISCES secondary market transactions lined up to the end of Q1 2027 of nearly £550m.
“We‘ve seen over the last few years, more businesses are doing secondaries,” Kerrigan says. “You've seen the likes of Monzo, Revolut and GoCardless. This is going to be much more normalised than just waiting out for an IPO.”
Learn more about employee liquidity and secondary share sales at Crowdcube's workshop at this year's Sifted Summit on 1 October. Find out more here.
