Founder secondary = founders sell a portion of their existing shares as part of a primary funding round. Increasingly common at Series B+ to give founders some financial security and reduce pressure on the company outcome.
Typical sizes: 5-15% of founder shares at Series B/C. Above 25% usually signals weak founder conviction and gets pushback.
The right amount of secondary helps founders make better long-term decisions. The wrong amount changes investor perception of your conviction.
Run the math against multiple exit scenarios. At a 3x exit, secondary today often beats holding. At a 10x exit, the opportunity cost of selling early is significant.
3-5x of current post-money is common; 10x+ is the optimistic case. Run multiple scenarios to see the trade-off.
Most investors are comfortable with this range. Above 25% creates conviction questions.
Long-term capital gains is typical (if held > 1 year). The calculator shows pre-tax dollars.
Lead investors often facilitate secondary. Bringing it up after the term sheet is signed is too late.