If you’ve been around startups for a while, you know the old story: founders and early employees grind away for years, only to see their equity locked up until some distant IPO or acquisition event. It’s a long wait with no guarantees.

But lately, that story is changing, thanks to secondary market platforms gaining real traction, and some fresh regulatory moves out of Washington that insiders are quietly excited about.
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What’s Actually Happening with Secondary Markets?

There’s been a lot of hype around platforms like Forge Global, EquityZen, Nasdaq Private Market, and others. But here’s the real deal: these platforms are no longer just exotic curiosities. They’re fast becoming the way for founders, early employees, and investors to get liquidity well before an exit.

These marketplaces connect sellers of private shares to institutional buyers and high-net-worth individuals. That means you can find a buyer today for stock that previously meant locking capital into limbo. Sure, these deals still need company approval and compliance checks, but the process is smoothing out.

Why does this matter?
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• Founders get real dollars now instead of betting everything on an IPO that might never come.
• Early investors can recycle capital faster, fueling more startup deals.
• Secondary liquidity is becoming a strategic lever in fundraising negotiations—founders can negotiate partial liquidity while raising rounds, reducing personal risk.
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The Big Wildcard: New Laws Making This Stuff Even More Attractive

Two recent legislative developments will shake this up dramatically:
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1. The One Big Beautiful Bill Act (OBBBA), Signed July 4, 2025

This is a game changer for QSBS tax treatment. The key big points are:
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• The QSBS tax exemption holding period drops from 5 to 3 years. That means founders and early investors can sell shares and still dodge capital gains tax much earlier.
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• The cap on gains exclusion goes up, and eligibility expands. More companies and transactions qualify.
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• That reduces the tax penalty on early liquidity, making secondary sales financially sane, not just a desperate move.
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Expect founders to use secondary sales proactively, not reluctantly. This could shift ‘hold till IPO’ thinking into ‘sell some shares early and diversify risk.’
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2. Empowering Main Street in America Act (EMSAA) and Other Proposals
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This broader legislative push is about expanding who gets to play in private markets, reducing friction and increasing transparency. The hope: founders from more diverse backgrounds raise money more easily, and a wider range of investors can participate in secondary deals without regulatory nightmares.
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Why You Should Care (Founder, Investor, or Operator)
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• Early liquidity is becoming a feature, not a bug. Secondary sales go from odd exceptions to expected parts of a startup’s lifecycle.
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• Fundraising dynamics will shift. Investors will price in founder liquidity windows. It’s less about encouraging founders to hang on forever and more about smart financial planning.
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• Startup ecosystems could get healthier. Capital won’t be stuck in “zombie” shares; it’ll flow faster, powering the next wave of innovation.
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• Valuations and competition for deals increase. More buyers chasing pre-IPO shares could drive prices—and expectations—higher.
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Bottom Line

The secondary market revolution isn’t a fad. It’s a structural change that, combined with smarter tax policy, is fundamentally rewiring startup economics. If you’re a founder, employee, or early investor, it’s time to think seriously about how and when you access liquidity. And if you’re sitting on fragile equity hoping for a distant exit event, maybe it’s time to hedge that bet with this new more flexible playbook.

Stay sharp. This stuff is moving fast.