Jason M. Lemkin argues that employee liquidity is critical for venture success when broader public/liquid markets are constrained. He notes that without liquidity employees and VCs cannot sell stock or meaningfully pursue M&A, and asserts that the venture market has lacked liquidity since 2021.
If you can't distribute your stock, if you can't sell your stock, it doesn't matter much for venture. But if there's no liquidity, employees can sell their shares and you can do a little bit of M and A. But how much M and A can you do at a billion? Like use 8% of your market capital? Can you buy in today's world? So what's the point? If your VCs can't get out and you can't buy anything, then employee liquidity is critical. But maybe that's all it really does. We haven't had liquidity. There's random things that happen. We haven't had liquidity in Ventures since 2021.
