Employees Were Offered Billions for Their Shares. Many Said No.

People who work at startups are often paid partly in shares. Those shares usually cannot be sold on a stock exchange until the company goes public, so many companies run tender offers: planned rounds where investors, or the company itself, buy shares from staff at a set price. According to PitchBook, "Tender offers from US startups hit $18.4 billion in 2025."

My name is Alexander Kopylkov, and I invest in AI, deeptech and infrastructure companies. In April, PitchBook reported something I found surprising: "Employees at the most valuable private companies approaching IPOs are increasingly declining to sell into tender offers worth billions of dollars, even as investor demand to buy their shares far outstrips what's available."

The buyers offered a higher price, and the staff still held on.

Buyers of private company shares usually pay less than the official price. PitchBook's analyst Emily Zheng said these offers were unusual: "Employees at these companies are forgoing transactions priced above their employers' valuations, while secondary sales at other companies typically come at a discount." A valuation is the price investors last agreed the whole company is worth. A secondary sale is any sale of existing shares from one owner to another.

One investor called the situation a "champagne problem," and added that "many have already taken money off the table in prior tender offers."

The people interviewed gave two reasons for holding. Shriram Bhashyam of Sydecar said, "There is less incentive to sell into a tender the closer a company gets to an IPO, as the employees can sense a liquidity event on the horizon." A liquidity event is the moment shares can be sold freely, such as a stock market listing. Compensation consultant Jody Thelander described the mood more simply: "You think it's going to be real wealth creation, and you believe in it."

Research shows that the unusual trades carry the information.

Economists have studied how company insiders trade for decades. Lauren Cohen, Christopher Malloy and Lukasz Pomorski looked at insiders of US listed companies from 1986 to 2007, in a working paper later published in the Journal of Finance. In their data, "Corporate insiders include officers with decision-making authority over the operations of the firm, all board members, and beneficial owners of more than 10% of a company's stock."

They start from a simple point: "routine sells by insiders are commonplace in the market, and can be driven by diversification or liquidity reasons." Diversification means spreading your money across many investments. Liquidity reasons simply means needing cash.

The researchers called an insider "routine" if they traded in the same calendar month for at least three years in a row, and found "the abnormal returns associated with routine traders are essentially zero." Abnormal returns are gains above what would normally be expected for that kind of stock. Everyone else they called "opportunistic," and those trades "contain all of the predictive power for future firm news, events, and returns."

The study covers listed companies, so applying it to startups is my own reading. An employee who sells a slice in every tender looks routine to me, and I learn little from it. When most staff turn down a price above the company's own valuation, I treat that as a real signal from the people who see the business every day.

Keeping most of your savings in your employer's shares is still a big bet.

Employees can also misjudge their own company. Olivia Mitchell and Stephen Utkus studied company stock in US retirement plans in a 2002 paper. They found that employees' choices "do not seem to depend on 'inside information' regarding their firm's prospects: they tend to overweight stocks that later deteriorate and underweight stocks that improve."

The same paper cites an estimate by Lisa Meulbroek: "$100,000 in company stock is only worth $42,000 to an employee with nondiversified holdings." In plain words, when a large part of your wealth sits in one company's stock, the extra risk makes each dollar of that stock worth less to you.

A table in the paper shows how that risk can play out. It lists Polaroid with 19% of its employee retirement plan in company stock, and a share price change of -99.6% from March 2000 to December 2001.

PitchBook also noted that most companies look different: "At most late-stage companies, employees are still selling." Barrett Cohn of Scenic Advisement put it in four words: "They are lining up."

The people closest to a company know the most, and they also carry the most risk.

Both things are true at once, and I keep both in mind. When I look at a late-stage company, I want to know how its staff behaved in the last tender, and whether that behavior broke their usual pattern.

My own rule for anyone holding startup shares is to sell enough to sleep well and keep the rest for the upside. A mix like that leaves room for both your knowledge of the company and the uncertainty of the future.