In Plain Sight - 03
In Plain Sight is a weekly blog from Rhys that we will publish every Thursday at 8am UK / 9am CET. Each edition will be focused on a thorny topic within investing, startups, learning and work and policy.
In Plain Sight is partially a personal attempt to think independently and to avoid leaning too much on AI for answers to our questions. Will we use AI to edit and polish the text? Yes. But more importantly, will we come up with all of the ideas and analysis? Yes.
Here follows Edition 03 - 'The rising tide of employee secondaries'
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Here's an audio version if that's your preference:
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In September 2025, Revolut's secondary created 239 millionaire employees. Albeit on a grand, grand scale that is far from representative, this is the employee equity promise made manifest.
For years, startup equity came with a simple deal: join early, help build something valuable and realise that value at exit. Employees traded, typically lower cash compensation for a slice of upside and the wait to liquidity was measured in years.
This deal is not ageing well. Companies now stay private for far longer. IPOs are rarer and more selective. M&A is largely out of an employee's control entirely. At Brighteye, we considered that the median journey to IPO has expanded from roughly four years to around 15, covered in our "How to Sell Your Company" guidance. That is not a modest delay and it changes the nature of the deal described to employees.
An employee can spend eight or ten years building a business and exercising options and still not be able to realise the value they've had a hand in creating. Founders often respond by issuing larger grants. But more illiquid equity does not solve what is fundamentally an illiquidity problem.
We think there's a more useful way to see this: the problem is that there is insufficient confidence that the equity will become usable wealth.
Boards control the timing of an exit. Institutional investors have diversification, information rights and specialist advisers working on their behalf. Employees typically have none of that, despite holding much of their personal wealth in a single illiquid company.
Early on, that asymmetry feels like a reasonable trade. The upside is meaningful and the exit horizon feels close enough to sustain belief. But when the horizon moves from four years to fifteen or continually gets pushed further and further away, belief alone stops being enough as it doesn't pay a mortgage and it doesn't necessarily justify another five years of waiting.
This is where secondaries - an existing shareholder selling shares to another investor, without the company issuing new equity - come into play. For employees, a well-designed secondary turns part of an abstract promise into something tangible. And we've seen, repeatedly, that partial liquidity strengthens alignment rather than weakens it: employees are often more willing to hold onto meaningful upside once they've been able to realise some value along the way. A side effect of this is that I think employees may be attracted by smaller chunks of equity if there is a clearer and more realistic path to liquidity (i.e. founders may be able to keep hold of more of the company for longer)...
The venture industry, on average, still talks about the IPO as a natural destination of a successful company. In reality, it has become a narrower and less predictable path. An EIF and Invest Europe survey found that IPOs and sales of listed shares accounted for only 4% of reported European venture exits in 2024.
Public markets still matter - they provide broad ownership, continuous price discovery and accountability that private markets can't replicate. But an IPO is a financing and governance decision for the company. It is not, and never really was, a dependable liquidity policy for the people building the company.
That leaves founders needing two plans: an exit strategy for the business and a liquidity strategy for the people inside said business.
The US offers a preview of the direction this is likely to take. Stripe, OpenAI, Anthropic, Notion and SpaceX have all used tender offers or company-supported secondaries to let employees sell part of their holdings while remaining private. Stripe's 2025 tender offer, backed by participating investors and a company share repurchase, is a clean example. What's notable is how these companies are framing it: it's not considered a failed substitute for an IPO, but rather as infrastructure for remaining private at scale, on their own terms. Fortunately, the companies leading the charge are undeniably massively successful and so no one is inclined to question whether the secondaries are tied to flattening or worsening performance.
The secondaries model is controlled. Companies choose who can sell, how much, and to whom. Employees realise some of their shares without giving up all future upside. Selling some shares doesn't have to signal weak conviction - it can simply mean employees have mortgages, families and ambitions beyond the company they work for...
Historically, private companies faced a blunt choice: stay private and illiquid, or go public and become continuously traded. There wasn't a middle ground.
The UK's Private Intermittent Securities and Capital Exchange System - PISCES - is an attempt to build this middle ground. It creates a third category: private companies whose shares can trade periodically through regulated infrastructure, with companies retaining control over timing, eligible sellers and investor participation. It's currently being tested through the UK's financial-market-infrastructure sandbox ahead of a permanent regime.
For founders, the proposition is straightforward: structured liquidity, without importing the full burden of public-market life. That matters because bespoke secondaries are often expensive, slow and advisor-heavy. PISCES could reduce that friction and standardise disclosure. Early transactions involving Wayve and Moneybox have proven that employee liquidity can happen without forcing an IPO or destabilising the existing cap table.
The UK is now well-placed to lead on the infrastructure connecting long-term private ownership with periodic liquidity.
The least discussed benefit of employee secondaries is also, in our view, one of the most important: they recycle entrepreneurial capacity.
Many of the best startups are founded by people who previously helped scale another successful company. They leave with networks, judgement and operating experience. What they often lack is personal runway, the ability to absorb several years of lower income and higher risk. A well-timed secondary can provide exactly that: the freedom to start a company, make angel investments, or avoid raising institutional capital too early.
This is how strong ecosystems compound. They recycle not just investment returns, but people, knowledge and conviction. A successful startup can become a founder factory before it ever exits. That matters especially in Europe, where the pool of repeat founders and experienced operators is still shallower than in the US (Sweden is arguably the exception). Periodic departures is how ecosystems reproduce. How proud must founders feel when their team departs and builds something great? What a legacy it is to have created a 'mafia'...
All of this said, secondaries are not frictionless and we'd be doing founders a disservice pretending otherwise.
Private shares are genuinely hard to value. Buyers may be more sophisticated than sellers, which creates room for employees to sell at a discount they can't influence. Access can be distributed unfairly - a programme available only to executives can damage trust even when it's legally straightforward. And a large founder sale, timed badly, can send a very different signal to the market than a limited employee sale intended to reward tenure.
PISCES and equivalent mechanisms can improve process and standardise disclosure. It cannot replace transparent governance. Nor should secondaries become an excuse to avoid public markets indefinitely. At the moment, they are more of a bridge than a permanent substitute.
For founders building a liquidity strategy (it's now possible to be strategic because there are more options on the table!), we'd suggest treating secondaries as part of capital, talent and governance strategies. Here's our working advice:
- Start with the objective. A programme designed to reward tenure looks different from one meant to retain senior staff, provide liquidity to former employees, consolidate the cap table, or bring in strategic investors.
- Coordinate timing with primary financing. A secondary creates a reference price and shapes expectations for the next round.
- Manage the signal carefully. Who gets to sell, and how much, says as much about the company as the transaction itself.
- Design for fairness. Eligibility, vesting thresholds, sale limits and treatment of leavers should be transparent and defensible.
- Educate employees properly. Valuation, dilution, tax and share-class rights aren't intuitive. A liquidity event should create choice rather than pressure.
If the journey to IPO has stretched from roughly four years to around fifteen, the institutions around private ownership need to stretch with it. Employee equity only works when employees believe it can become real. Secondaries make that belief more credible. At their best, they do more than reward the people who built one company - they help finance the people who will build the next!
