When Adam Eagle joined payments processing startup Stripe in 2017, it was an up-and-coming private company based in SoMa, valued at just shy of $10 billion.
Five years later, when he left to start his own thing, Stripe was a sprawling fintech platform worth $74 billion, with an impressive South San Francisco campus. Despite the company’s size and more than $14 billion in annual revenue, it was still privately held.
Eagle noticed after he left — and the company continued to put off going public by raising vast sums of venture funding — that his fellow “Stripes” were spending big on homes despite much of their wealth being tied up in illiquid private company shares.
“People would casually mention that they bought a home in the peninsula, or the Oakland Hills, or a fancy neighborhood of San Francisco,” Eagle said. “On our ex-Stripe-employee Slack channel, people would share beautiful photos of remodelings and renovations.”
His own company, Beam, which provides financial services to construction businesses, was further proof of this phenomenon. Contractors he worked with were extremely busy with clients from private tech companies who were paying for premium upgrades almost exclusively in cash.
The windfall, he learned, was coming primarily through secondary sales, in which a shareholder in a company — a founder, employee, or investor — sells their stock to other investors or back to the business itself.
Selling secondary shares — in juggernauts like OpenAI, ByteDance, and Databricks or early-stage startups you’ve never heard of — has become the way tech employees and investors turn paper wealth into cash long before the companies go public or get acquired.
“The secondary market is at an all-time high,” said Spencer McLeod, a partner at G Squared, a venture capital firm that provides on-demand liquidity by buying secondary shares from tech employees and investors. “There’s more value trapped in the private company space — especially in venture-backed companies — than ever before.”
When G Squared was founded in 2011, the term “unicorn,” used to describe a private company valued at more than $1 billion, didn’t exist. Today, there are more than 1,200 globally, with a combined market value of $4.4 trillion.
That flood of cash is quickly making its way into what is typically an individual’s single biggest purchase: a home.
“We often hear things from clients like, ‘The moment we did a secondary, we wanted to buy a house,’” said Anu Jain, founder of San Francisco-based luxury interior design firm Atelier Oleana.
Designers like Jain, along with local real estate agents and contractors, report that between the return-to-office push, the AI boom, and regular secondary sales minting new millionaires, they have never been busier.
“The market is super, super hot,” said Matan Schejter, owner of Mission Home Remodeling, about luxury home renovations. “San Francisco is booming.”
Unlocking the treasure chest
For much of the modern tech industry’s history, an IPO was the route to fortune. In 1999, the average time from idea to IPO was five years, according to research by University of Florida business professor Jay Ritter. But the growing pool of private capital and uncertainty around the long-dormant IPO market has pushed that time frame to 14 years.
It’s now a badge of honor for companies to stay private for as long as possible. But that means employees and investors are saddled with shares worth millions that they can’t spend.
“You can’t pay for House of Prime Rib with Stripe shares,” McLeod said. Neither can you use private shares to pay for student loans, a kid’s tuition, or a pricey home. “It’s like having a treasure chest but no key to open it.”
To quell internal pressure to go public, tech companies increasingly organize structured secondary sales, also known as tender offers, which give employees and investors a chance to sell a portion of their shares.
McLeod, whose venture firm pioneered “secondaries as a service,” says his phone has been ringing off the hook for a few years. Executives from Anthropic, Brex, Coursera, Spotify, and Wiz are among those who have him on speed dial for when they need to cash in anywhere from a few thousand to $200 million worth of shares.
“I’m the girl everyone wants to take to prom right now,” McLeod said.
Last year, Stripe announced a tender offer for employees and shareholders that valued the company at $91.5 billion. It has regularly conducted tender offers since its founding in 2010.
“We very much care about providing good liquidity for employees and existing shareholders,” Stripe cofounder John Collison said in an interview on CNBC in February, adding that the company has no near-term IPO plans.
The list of companies organizing secondary sales continues to grow.
OpenAI recently allowed employees to sell roughly $1.5 billion worth of shares, as did SpaceX, which bought back $1.25 billion in shares from insiders. Databricks, ByteDance, Canva, and Figma organized secondary sales last year. Outside of large structured secondary sales, smaller liquidation events are frequently taking place at private companies, according to McLeod.
It’s not just big names — early-stage startups are also organizing such sales to keep employees and investors happy, according to Tom Callahan, CEO of the secondary trading marketplace Nasdaq Private Market.
“For many companies, tenders have become a basic HR benefit, along with health insurance and 401(k),” said Callahan. Since its founding in 2013, Nasdaq Private Market has facilitated nearly $60 billion in transactions on behalf of private companies, investors, and employee shareholders. Last year, $7 billion in transactions passed through the private marketplace.
The mechanism has also become a tactic for investors to get a toe into the hottest early-stage startups. Menlo Ventures’ Deedy Das wrote on X that he’s observed early-stage founders selling millions more in secondary sales than their companies make in annual revenue to venture investors hungry for equity.
‘Tired of waiting’
Flush with cash, beneficiaries of secondary sales are often putting their riches into housing.
Jason Hoffman, a real estate agent who specializes in luxury homes and condos, said this is one of the busiest times in his 17 years working in San Francisco. He compared the crush to the 2010s, when Tesla, Facebook, and Twitter went public and created millionaires overnight.
The decline of remote work in San Francisco and hype around the AI boom have pulled tech workers back in after they fled to more spacious quarters like Wyoming and Idaho, Hoffman said. Recently, he’s worked with executives at OpenAI, Anthropic, and Perplexity who used secondary share sales to buy homes in San Francisco.
“We’re seeing a huge resurgence of demand to be back in San Francisco and haven’t felt the lack of recent IPOs impact demand,” Hoffman said. Noe Valley has been an especially popular neighborhood for people with regular commutes to the peninsula and South Bay, while those who work in the city usually look for homes in Russian Hill, Nob Hill, and Pacific Heights.
The number of home sales over $5 million surged in March, doubling from a year before, according to real estate firm Compass.
“More tech employees are using liquidity from secondary sales to make strong, often all-cash offers — especially in competitive neighborhoods like Noe Valley and Pacific Heights,” said broker Danielle Lazier, adding that her clients say they are looking to diversify their assets beyond their private company stock into real estate.
Jain, the interior designer, often finds herself adding contemporary touches to old homes in Pacific Heights, Cole Valley, and St. Francis Wood. She said her client list includes a founder who sold secondary shares from her Series C startup and an investor who sold a secondary stake in a mature startup that he invested in at an early stage.
“Founders and VCs are tired of waiting for that perfect moment to come,” she said, adding that her clients worry that if they wait for an IPO, they’ll be thwarted by the limited housing inventory in historic neighborhoods.
While seasoned techies who already have homes in San Francisco are using secondary sales to buy second properties in Napa or Atherton, many of Jain’s clients are founders who have been grinding on their startups out of tiny SoMa apartments and paying themselves small salaries.
“Buying a home is an emotional purchase that represents the success they’ve built,” said Jain. “They don’t need to wait for an IPO that might be years away to recognize how far they’ve come.”