Latest / The Series A Show with Fexingo: Early-Stage Funding, Pitch Decks, and Startup Milestones / Why Series A Startups Now Pitch a Private Market Liquidity Slide
Transcript
- Lucas: So, Luna, I was flipping through a batch of Series A decks this week — the usual mix of vertical AI agents and climate tech — and there's one slide that's showing up more and more that wasn't there two years ago. Luna: Let me guess — is it the one that says 'liquidity' with a little chart of secondary sales? Because I've seen three of those in the last month alone. Lucas: Exactly. The private market liquidity slide. And it's not just a nice to have anymore — it's becoming part of the standard Series A narrative. Founders are now explicitly laying out their plan for how early employees and even founders themselves can get some cash out before an IPO or acquisition. Luna: But isn't that a bit counterintuitive? You're raising money to grow, and you're already talking about exits? Doesn't that spook investors? Lucas: You'd think so. But the context right now — mid-August 2026 — is that the IPO window is still not really open for most companies. You look at the market: Rivian's down over seven percent in the last five days, Shopify's off two and a half, even Meta's down six percent. The public market is selective, to put it mildly. Luna: So founders are basically saying, 'we might be private for a while, and that's okay, but we need a way for people to not feel trapped.' Lucas: Right. And the smart ones are getting ahead of it. Instead of waiting for the question 'what's your liquidity plan?' in due diligence, they're putting it front and center. It shows that they've thought about the full lifecycle of the company, and that they're not just chasing a unicorn valuation that never converts to cash. Luna: But what does that slide actually contain? Is it like, 'we'll do a secondary at some point'? Or is it more specific? Lucas: The good ones are very specific. They lay out a timeline — like, 'we expect to facilitate a secondary in year three, with a target of ten to fifteen percent of the company.' They name the instruments: preferred stock tenders, structured liquidity programs, even something like a special purpose vehicle for employees. Some are even tying it to performance milestones. Luna: And that's the part that makes VCs nervous, right? Because if the liquidity is conditional on hitting certain numbers, it can actually align incentives. Lucas: Exactly. The best slides aren't just about getting cash out — they're about alignment. They're saying, 'we want our early team to stay motivated, and we know that a chunk of equity that never vests is worthless. So here's how we're going to make that equity real.' Luna: I've also seen some founders use that slide to talk about their own stake. Like, 'I'm not planning to sell a single share until we're public.' That must be powerful. Lucas: It is, but it's a double-edged sword. If the founder says 'no liquidity for me,' some investors hear 'great, fully aligned.' But others hear 'this person is overconfident and might not be flexible when we need to pivot.' So the slide has to be nuanced. Luna: And what about the opposite — a founder who says 'I want to take a hundred million off the table'? That sends a different signal. Lucas: That's the extreme, and honestly, most early-stage founders don't have that luxury. But there's a middle ground. Some are saying 'I'll take a modest amount — maybe one or two percent — just to show that I'm not in this for the paper wealth alone.' Luna: So it's really about the story you're telling, not just the mechanics. And that's why it has to be woven into the whole narrative of the pitch, not just a random slide. Lucas: Exactly. Look, we're lucky that we can have these conversations without worrying about ad breaks or sponsors. That's something we chose deliberately. If you find this kind of analysis useful — whether you're building something or just trying to understand the funding landscape — and you want to keep it that way, you can support us at buy me a coffee dot com slash fexingo. It's a small gesture, but it keeps this show ad-free. Luna: Yeah, and it really does make a difference. We're not backed by anyone, so it's just us and the listeners. Lucas: Anyway, back to that liquidity slide. It's not just about the founder's story. It's also about the employees. In a tight hiring market, offering a clear path to liquidity can be a huge retention tool. I've seen startups lose key engineers because a competitor offered a signing bonus that was basically a quarter of their paper equity. Luna: So the slide doubles as a recruiting pitch. 'Join us, and you'll actually be able to sell your shares before we go public.' That's compelling. Lucas: And it's a signal to the VC that the founder understands talent dynamics. Because a Series A company is only as good as the team that stays. Luna: But isn't there a risk that the slide becomes a red flag? Like, if a founder spends too much time on liquidity, maybe they're not focused on the product? Lucas: That's a real concern. In fact, I've heard some investors say they immediately discount a pitch if the liquidity slide feels like a wish list rather than a realistic plan. The founders who nail it keep it to one slide, with a clear timeline and a sense of how it fits into the broader strategy. Luna: So what's the one thing a founder should absolutely avoid on that slide? Lucas: Over-promising. Saying 'we'll do a secondary every year' when you're not even generating revenue yet — that's a credibility killer. Investors know that liquidity events are opportunistic, not guaranteed. The slide should communicate 'we have a plan, but we're flexible.' Luna: And I guess that ties back to the broader conversation about how long companies stay private now. With the IPO market the way it is, liquidity has to come from somewhere else. Lucas: Exactly. Look at the public markets right now — Apple's up two and a half percent this week, Tesla's up almost three, but a lot of tech is struggling. The IPO window is selective at best. So companies are staying private longer, and that means the secondary market is becoming the only exit for early shareholders. Luna: And that's why the slide is showing up. It's not just a trend — it's a response to a structural shift. Lucas: Right. And I think it's a healthy shift. It forces founders to be honest about the timeline and about how they're going to reward the people who took a risk on them. Luna: So if you're a founder listening, should you add this slide to your deck even if you're not planning a secondary? Or is it better to wait until you have something concrete? Lucas: I'd say bring it up, but don't force it. If you have a real plan, share it. If you don't, it's okay to say 'we're exploring our options' — but be prepared to elaborate. The question is coming up in every due diligence conversation I've seen this year. Luna: So it's become table stakes. Lucas: It has. And the founders who treat it as a strategic tool, not a defensive measure, are the ones who are going to stand out. Because at the end of the day, it's about trust — can you show that you're thinking about the long term, for everyone involved? Luna: And that's the kind of founder I'd want to back.