A 2021 Mark Costs Your Holders 60 Cents.
The discount an early holder takes on the way out is set by the year of your last priced round, not by how the business has performed since.
Private shares sell for less than the most recent round price. That much is expected. What surprises founders is how much the size of the gap depends on the vintage of that round rather than on anything happening in the company now. Shares in companies last priced in 2021 change hands at roughly 60 percent below that round. A 2024 mark trades about 17 percent under. A 2025 mark, about 1 percent. Companies priced in 2026 trade at full value.
Read down that list and the pattern is not about business quality. It is about how far each mark has drifted from what the market will currently pay.
What that means when a holder asks for the exit
Take an illustrative case. A recurring-revenue technology company last priced a round in 2021 at a $60 million post-money valuation. An early investor holds 2 percent, worth $1.2 million at that mark and carried on everyone’s spreadsheet at that number for five years.
The early investor wants liquidity. On a secondary at roughly 60 percent below the 2021 round, the stake clears near $480,000. The route itself costs about $720,000 of nominal value.
Nothing in that arithmetic is a judgment on the company. The business may have tripled its ARR since 2021 and still see this outcome, because the reference price is a five-year-old mark set in a very different market and the buyer is pricing against today instead.
Two things happen that founders do not price in
The first is that the discount is permanent for that holder. There is no mechanism by which they recover the difference later; they sold at the number available on the day.
The second is that the transaction leaves a print. A completed secondary at a given price becomes a reference point, and reference points get consulted. Future holders asking for the same treatment now have a precedent, and a company that would rather not anchor its own valuation conversations to a distressed-looking number has just done exactly that.
Neither of those is an argument against providing liquidity. Long-tenured employees and patient early investors have legitimate claims, and a company that never addresses them pays for it in retention and in goodwill. The argument is that the secondary is one route among more than one, and it is usually the only one anyone models.
The alternative is a repurchase, funded rather than raised
A company can buy the stake back itself. That retires the claim instead of transferring it, keeps a new outside holder off the register, and does not require an equity event the company did not otherwise need.
The obvious objection is cash. A business at $8 or $10 million of ARR is not sitting on several hundred thousand dollars of spare liquidity for a cap-table decision, and raising a round to fund a buyback is a strange sequence of events.
Contracted recurring revenue earns its keep here. Debt sized against ARR is available to a company whose revenue is contracted and whose margins clear the bar, independent of whether the equity market is currently open or what a five-year-old mark says. Timing matters here too: US rules keep a tender window open a minimum of 20 business days, so a company-run process is a scheduled event with a known funding date rather than something arranged in a hurry.
How Thalos Capital Approaches This
Thalos Capital finances a repurchase the company has already decided to make. The structuring and the sourcing of the facility is the work; the repurchase itself, its mechanics, and any securities questions it raises stay with the company and its own counsel, where they belong.
Recurring Revenue Debt is structured around contracted recurring revenue rather than hard assets. An Amortized Term Facility runs three to six years for companies between $2 million and $20 million in ARR, with principal that ladders up as revenue grows. An Interest-Only Facility runs two to three years at $5 million or more in ARR. Both require a recurring-revenue technology business in the United States, at least ten clients, and gross margin above 50 percent. Neither carries dilution, board seats, or warrants, which is the point when the purpose of the money is to reduce the number of claims on the company rather than increase it.
The comparison worth running is not debt against equity. It is a funded repurchase against a discounted transfer. One retires a claim at a negotiated price on a schedule the company sets. The other moves it to a new holder at whatever the market pays for a stale mark, and leaves a number behind.
An early holder in a company carrying a 2021 valuation is looking at roughly 40 cents on that dollar if the only route offered is a secondary. That is a real cost to a real person who backed the business early, and it is worth knowing it is not the only option before the conversation happens.
Most financing situations have more options than the borrower initially sees. A conversation is enough to map them. Submit your financing request at https://thaloscapital.com/contact.