Brian Halligan Advises Founders to Secure Early Liquidity, Suggesting 1-5% Secondary Sales

Cambridge, MA – Brian Halligan, co-founder and Chairman of HubSpot and a senior advisor at Sequoia Capital, recently took to social media to offer crucial advice to startup founders: "Dear Founders, Take money off the table in the next round. Love, Brian." This concise message underscores a growing sentiment within the venture capital ecosystem that founders should prioritize personal financial security to foster long-term commitment and resilience.

Halligan's perspective stems from his extensive experience, advocating for founders to "make a large pie & take a bite along the way." He has previously noted that allowing founders to sell some common shares, known as secondary sales, can "stiffen" their backbone against premature acquisitions and keep them focused on building enduring companies. This approach aligns the founder's personal financial well-being with the company's sustained growth.

"Taking money off the table" refers to founders selling a portion of their personal equity (shares) to new or existing investors during a funding round, rather than drawing funds directly from the company's capital. This strategic move provides founders with liquidity, allowing them to de-risk their personal finances without fully exiting their venture. It is distinct from using company funds for personal gain, which would be considered fraudulent.

The benefits for founders are significant, including reducing personal financial stress and preventing burnout, which can be critical given the demanding nature of startup leadership. Financial stability enables founders to make long-term, strategic decisions for the company, rather than being swayed by immediate personal financial pressures. It also enhances negotiation power during future funding rounds or exit opportunities.

Historically, early founder liquidity was often viewed with skepticism by investors, seen as a sign of reduced commitment. However, market trends, particularly in the U.S. and increasingly in the U.K., indicate a shift in this mindset. Many venture capitalists now recognize that enabling modest early liquidity, typically between 1-5% of the funding round, can be a tool to sustain founder ambition and commitment over the long haul.

This evolving view acknowledges that founders often work for years with minimal compensation, making early liquidity a vital "breathing room." Responsible secondary sales, aligned with company milestones, are increasingly seen as a positive practice that fosters a healthier, more mature entrepreneurial ecosystem. It allows founders to reinvest in the ecosystem as angel investors or future entrepreneurs, contributing to broader market growth.