In the past few years, more and more high-growth companies have quietly shifted from selling in the public market to staying private for longer periods of growth. This shift is driven by changing market dynamics, including less predictable exit windows and longer private company lifecycles.
The struggle with balancing long-term scalability and ensuring employees, leaders, and other stakeholders can address real-life concerns is access to funds. As startups remain private, cash-out is increasingly seen not as an exit, but as a way to manage ownership, motivation, and liquidity differently.
In mature startups, liquidity timelines are often uncertain or delayed. Early investors, founders, and early employees hold onto their equity longer, leaving limited opportunities to convert it into cash. That absence of such liquidity can create internal pressure over time.
It’s important for mature companies to have an open conversation about partial liquidity that structures share sales in alignment with long-term growth strategies.
Why Cash-Out Doesn’t Necessarily Signal an Exit
Traditionally, the idea of a founder cashing out (selling) shares quickly is often interpreted as a negative market signal. If they are selling, they must be leaving for a reason, such as a lack of confidence in the company’s future.
That interpretation doesn’t reflect current growth company environments. In many cases, partial liquidity is not the same as a full exit. For example, a founder or employee may seek limited liquidity to address personal financial needs or reduce financial risk. That doesn’t mean they don’t believe in the company’s mission or are any less dedicated to its success.
As Oleg Khusaenov, CEO and Founder of Zubr Capital, remarks, “Many entrepreneurs build and build for company growth, but paper value doesn’t mean real money in their bank accounts. We say: fix your success. Sell a small stake. Even a 2 per cent sale can equal millions in cash value.”
With a smaller cash-out, founders and early team members can retain value in the company for years while also accessing limited liquidity to reduce personal financial risk. This can support long-term stakeholder incentives, especially in distinguishing the realities of early-stage startups from those of more mature companies.
It is also important to distinguish between early-stage startups and more mature companies. If a founder sells early in a startup, it raises concerns about commitment. If they sell at a later stage, it may reflect a natural evolution in which the company still has a distributed ownership structure, making partial liquidity less likely to be seen as a signal of departure.
When Liquidity Strengthens Motivation
Partial liquidity can help strengthen motivation rather than weaken it. Plenty of mature growth companies face structural pressures that naturally emerge, especially as they scale and remain private for longer periods.
With limited liquidity, there is a natural reduction in personal financial concentration for founders and early team members. Instead of large shares of personal wealth remaining tied to a business for years, founders and key employees may sell a small portion of their holdings. That reduces concentration and does not necessarily change their long-term incentives.
Konstantin Zapolianski, Senior Investment Director at Zubr Capital, explains this dynamic directly in practice. “Cash-out can be a useful tactic when a founder needs to resolve personal finance matters. They can buy a home or fund a child’s college education. That is very different from the salary models in a company’s early stages. Cash-out also diversifies the risk portfolio of founders. It means less volatile instruments, building a financial buffer for their wealth. In our experience, this significantly reduces the founder’s stress level and noticeably increases their motivation.”
Liquidity can also reinforce the perceived value of a company’s equity. Many employees receive stock options as part of their compensation packages. However, their value remains theoretical (on paper) until the company matures. When they are given structured liquidity opportunities, even in limited form, equity becomes much more tangible. Research from Morgan Stanley indicates that 99 per cent of private company leaders agree that liquidity opportunities help attract and retain talent, with 61 per cent strongly agreeing.
The other significant reason to consider partial liquidity is a reduction in internal pressure to exit prematurely. When stakeholders lack a clear liquidity pathway, they have a greater incentive to pursue an exit. It can be more effective to allow controlled liquidity to relieve this pressure, making it easier to continue building the business. There just needs to be a structure placed on the option. Data from Carta suggests that employee participation in tender offers is often capped at around 20–25 per cent of vested shares, helping preserve long-term incentives.
These three effects of partial liquidity operate together as a single mechanism. They reduce personal risk, make equity more tangible, and remove pressure to exit prematurely. Put another way, structured partial liquidity helps stabilise long-term behavior, ensuring founders and teams remain focused on building for the future. For these reasons, structured liquidity should be viewed as a tool for mature private companies and not as a sign of disengagement.
Where Liquidity Requires Discipline
The only challenge lies in how these programs are structured. Partial liquidity without clear structure can have the opposite effect. It may increase the company’s risk by signaling internally and externally that people are leaving prematurely.
Whenever there is excessive selling, especially by founders or key team members, it raises questions about long-term commitment. Investors don’t want to lose those talents that determine a company’s projected success. The larger the transaction, the more likely it is to be perceived as a risk.
Oleg Khusaenov warns from direct experience, “We’ve seen a case at Zubr where a founder lost interest in the company after cashing out and moved on to other things. That is why using partial liquidity at an early stage should be approached with caution.”
Whenever a founder’s remaining stake doesn’t seem meaningful, the cash-out inadvertently removes the motivation it was meant to protect. Without clear limits or structure, such as defined caps, eligibility criteria, or transparency, liquidity events create perceptions of unfairness or misalignment among stakeholders.
Communication is just as crucial as public perception. Any liquidity event needs to be clearly explained to avoid public confusion or internal tension. When it’s structured, it limits the scope of selling and aligns the event with the company’s long-term ownership structure.
Zubr Capital’s Perspective
Most of the venture funds Zubr sees view cash-out as an uncomfortable instrument. Early-stage investments need capital to flow into the company’s resources for hiring, marketing, and R&D. If money is allowed to “leak” out of the company, especially by founders, that can feel at odds with that logic.
That reasoning only really applies to early-stage investment. At later stages, the calculation differs. When Zubr Capital considers an investment, the company has already built something substantial, often without needing additional capital.
For Zubr Capital, cash-out has become a standard part of many deals rather than an exception. That is why Zubr Capital doesn’t wait for founders to raise the topic. Cash-out options are often openly discussed as part of a deal structure.
As Konstantin Zapolianski notes, “Discussing partial liquidity as part of the negotiations often becomes a pleasant surprise to founders.”
The result is a broader philosophy in practice, where a cash-out is not seen as a concession but as a deliberate tool for managing motivation and long-term commitment. It brings flexibility to the table, as long as the core condition of the founder retaining a meaningful stake remains in place. That ensures all parties remain focused and motivated on the business’s future growth and stability.
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