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Venture Capital Startups

Startup Founders Use Record-High Valuations to Cash Out Earlier

By  |  Sept. 13, 2021 6:01 AM PDT
Photo: Illustration by Josh Brill

Earlier this year, Pipe raised a new round of funding led by investment firm Greenspring Associates that valued the financial software startup at $2 billion. As part of the round, Pipe co-CEO Harry Hurst also sold an undisclosed number of his own shares in the company, which he had co-founded two years before.

Such a share sale would have been uncommon only a few years ago, when investors avoided buying shares from founders running young companies out of fear the wealth would demotivate them at a pivotal time. But that culture has changed due to the past year’s funding boom: Founders are increasingly selling millions of dollars of shares in the earliest stages of the capital-raising process, venture capital investors and lawyers who work on such deals say.

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