Startup Employees Selling Shares Now Instead of Later, Study Says

Source: SecondMarket.

Data as of June 30, 2012.

A greater percentage of startup employees are choosing not to wait until after they leave the job to cash out their shares, according to SecondMarket, a popular online private-equity exchange.

In the first half of the year, 59.8 percent of private stock sales on SecondMarket came from current employees, while 24.1 percent came from former workers, the report said. During 2011, current staff made up only 11.1 percent of share sales, while those who left accounted for 79.3 percent, according to an earlier report.

Employees at closely held companies have become more comfortable with the idea of selling some or all of their stock while continuing to work there, according to the exchange. Startup executives tell SecondMarket they are encouraging this behavior in order to give employees the option of cashing out without feeling pressured to leave, said Aishwarya Iyer, a spokeswoman for the company.

“It’s a great way to say thank you to your employees,” she said. “It’s a morale booster.”

Facebook’s rocky IPO, which took place in May, likely didn’t instill confidence in employees weighing whether to wait until after their companies go public to sell shares.

Startups listed on SecondMarket choose to participate in the exchange and can set their own terms, Iyer said. They can set windows for when shareholders may sell stock, which typically last between a week and a month, she said.

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