A secondary sale is the sale of existing shares from one shareholder to a new buyer, with the proceeds going to the selling shareholder rather than to the company, as distinct from a primary round where the company issues new shares and keeps the cash.
Founders and early employees sometimes sell a portion of their vested shares in a secondary sale, often as part of a later round, to get some personal liquidity before an eventual acquisition or IPO without waiting years for a full exit. The company typically doesn't receive any of that cash, since it's a transfer between shareholders, not new investment.
Secondary sales are usually subject to a right of first refusal and often require company approval, since a private company generally wants some say in who ends up on its cap table. Worth planning for well ahead of time rather than assuming shares can simply be sold whenever a shareholder wants liquidity.
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