Several secondary buyers say unicorn shareholders are now much more interested in selling common stock
Connie Loizos / TechCrunch : Tweets: @msuster , @jaycuthrell , @briantopping , @rgwd67 , @abrams and @panzer Tweets: Mark Suster / @msuster : Further in “could have seen this coming a mile away” people trying to dump stock in high-priced startups by @Cookie http://techcrunch.com/... Jay Cuthrell / @jaycuthrell : The Unicorn value menu at VC Bistro Bar and Grill is 75% off! Filet Millions!' French Market Dips!" Sloppy IPOs!" http://www.techmeme.com/... Brian Topping / @briantopping : @techmeme @davemcclure 2000 started off this way, except the internet was not woven into the fabric of society back then. Roland Dennert / @rgwd67 : Yesterday I noted the approach from #unicorn sellers. Today it's in @TechCrunch Seems we are all getting the calls: http://techcrunch.com/... Jonathan Abrams / @abrams : “manufacturing high valuations by giving onerous preference terms destroys the value of employees' common stock” http://techcrunch.com/... Matthew Panzarino / @panzer : Fantastic by @cookie on the secondary market for slices of Unicorn meat http://techcrunch.com/... http://twitter.com/...
Context & Ripple Effects
This lands at the tail of the arc TechCrunch has been tracking since the 2015 Unicorn Club census: Bill Gurley's warning about unprofitable unicorns, then January's floundering tech stocks stalling the IPO path. With public comps repricing downward, insiders who once held out for an IPO are turning to the only exit left open — selling common stock into the secondary market.
The detail that matters is which shares are moving: common stock, not preferred. Common is the last-in-line claim on any exit, so a rush to sell it signals holders pricing in both a lower valuation and a longer wait than they expected when these rounds were marked.
First-order effects
- Secondary buyers gain negotiating leverage: with more unicorn insiders actively seeking to sell common stock, discount-to-last-round terms shift in buyers' favor.
- Employees and early holders at high-priced startups get a real but costly liquidity option — exiting now means accepting prices well below the marks their paper valuations implied.
Second-order effects
- Companies face pressure to defend their marks: if common trades at steep discounts, the next preferred round risks being priced off secondary prints rather than the last primary round, forcing down rounds or buybacks.
- Investors who argued the boom had further to run — the position Forbes' 'What bubble?' piece represented — now contend with their own portfolio insiders hedging, undercutting the narrative that marks will hold until IPO.
Third-order effects
- If the pattern holds, secondaries become the standing liquidity valve for a generation of companies that stay private far longer than the IPO cycle assumed — a structure the later CB Insights count of 1,200 unicorns still awaiting exit confirms rather than reverses.
- A persistent gap between primary marks and secondary clearing prices would push boards and regulators toward more frequent revaluation and disclosure of private-company holdings, since the old mark-to-last-round convention stops matching observable trades.
The trend: As the IPO window narrows, the secondary market is becoming the default liquidity mechanism for late-stage startup shareholders, with common-stock discounts serving as the market's honest repricing of unicorn valuations.