What is Secondary Sale?

In a primary financing, the company issues new shares and keeps the cash. In a secondary, an existing shareholder - a founder, early employee, or angel - sells their already-issued shares to an incoming investor or fund. The money goes to the seller, not the company, so the cap table changes hands but the share count and treasury don't grow. Secondaries often ride alongside a hot priced round, letting founders take some chips off the table. Why it matters to you: a secondary can be life-changing personal liquidity before an exit, but it's taxable (typically capital gains), may be capped by investors or the board, and is usually gated by a right of first refusal. It also signals to the market - selling too much can read as a lack of conviction.