The calculus around secondary stock sales just shifted. AI startups like Clay and ElevenLabs are now using tender offers as weapons in the war for talent, letting employees cash out early rather than enriching only founders. It's a marked departure from the 2021 boom, when founders pocketed millions while staff watched from the sidelines. As companies stay private longer and competition for AI talent intensifies, early liquidity is becoming less about founder windfalls and more about keeping your best engineers from jumping ship to OpenAI or Google.
Clay is cashing in its chips again. The AI sales automation startup just told employees they can sell stock at a $5 billion valuation, according to reporting from the New York Times. That's a 60% jump from the company's $3.1 billion valuation announced in August, and more than triple the $1.5 billion price tag from its first employee tender offer last May.
It's the second time in eight months that Clay has opened the liquidity spigot for staff. The eight-year-old company, which tripled its annual recurring revenue to $100 million in just one year, is betting that letting employees convert paper gains into real money will keep them from bolting to better-funded rivals.
Clay isn't alone in this strategy. ElevenLabs, the three-year-old voice AI startup, authorized a $100 million secondary sale for employees at a $6.6 billion valuation - double its previous value. And Linear, a six-year-old AI-powered project management tool competing with Atlassian, completed a tender offer matching its $1.25 billion Series C valuation.
The trend represents a fundamental shift in how secondary sales work. During the 2021 ZIRP era, tender offers and secondary transactions primarily benefited founders of buzzy companies. The poster child for that excess was Hopin, whose founder Johnny Boufarhat reportedly sold $195 million worth of stock just two years before the virtual events company's assets were sold for a tiny fraction of its peak $7.7 billion valuation.
But today's secondary deals look different. Clay, Linear, and ElevenLabs are structuring their transactions as employee-wide tender offers, not founder cash-outs. The distinction matters to investors, who've grown allergic to the outsized founder payouts that defined the pandemic boom.
"We've done a lot of tenders, and I haven't seen any drawbacks yet," Nick Bunick, a partner at secondary-focused VC firm NewView Capital, told TechCrunch. As companies stay private longer and talent competition intensifies, allowing employees to convert paper wealth into cash has become a powerful recruiting and retention tool. "A little liquidity is healthy, and we've certainly seen that across the ecosystem."
Clay co-founder Kareem Amin made the case explicit when announcing the startup's first tender last year. The main goal, he told TechCrunch, was ensuring that "the gains don't just accumulate to a few people." In a market where AI engineers can command seven-figure packages, that kind of early liquidity can be the difference between keeping your team intact and watching them defect to OpenAI or Google.
The talent war is real. Fast-growing AI startups are competing not just with Big Tech but with more mature private companies like OpenAI and SpaceX, both of which run regular tender offers for employees. Without offering similar liquidity, younger startups risk bleeding their best people to companies that can deliver cash today, not just promises of a future exit.
But there's a flip side to this liquidity boom. Ken Sawyer, co-founder and managing partner at secondary firm Saint Capital, warns of unintended consequences. "It is very positive for employees, of course," he told TechCrunch. "But it enables companies to stay private longer, reducing liquidity for venture investors, which is a challenge for LPs."
The logic is simple but troubling. If employees can cash out through tender offers and founders can delay IPOs indefinitely, venture capitalists get stuck holding illiquid investments for longer periods. When limited partners don't see cash returns from their VC fund investments, they become more reluctant to commit capital to new funds. That creates a vicious cycle that could eventually choke off startup funding at the source.
For now, though, the tender offer trend shows no signs of slowing. Clay's rapid-fire valuation increases - from $1.5 billion to $3.1 billion to $5 billion in less than a year - suggest that investors are willing to pay up for fast-growing AI companies, even if it means providing liquidity along the way. The company's revenue growth backs up the hype, tripling ARR to $100 million in just 12 months.
The question is whether this model is sustainable. The 2021 boom proved that soaring valuations and easy liquidity can evaporate quickly when market conditions shift. But unlike Hopin's founder-focused cash-out, today's employee-centric tender offers at least spread the wealth more equitably. If these AI startups can maintain their growth trajectories, the early liquidity might look prescient rather than premature.
What's clear is that the rules around secondary sales have changed. Founder windfalls are out. Employee retention is in. And in the battle for AI talent, a little cash in hand beats a lot of equity on paper.
The shift from founder-focused secondary sales to employee-wide tender offers marks a healthier evolution in startup finance, but it's not without risks. While giving employees early liquidity helps AI startups compete for talent against deep-pocketed rivals like OpenAI and Google, it also enables companies to delay IPOs indefinitely. That creates a potential liquidity crunch for VCs and their limited partners, who need cash returns to justify continued investment in the ecosystem. As Clay, ElevenLabs, and Linear demonstrate, tender offers can be powerful retention tools - but only if these companies can sustain their growth long enough to deliver on their sky-high valuations. The 2021 boom taught the market what happens when secondary sales outpace fundamentals. This time, employees are along for the ride.
