Some unicorns and late-stage VC-backed companies restrict their employees from selling their stock, often at the request of their boards of directors. Not this one. Andrew Feldman and his executive team at Cerebras Systems (a high-flying AI chip startup mounting a challenge to the likes of NVIDIA and Groq) have been willing to recognize the blood, sweat and tears that employees with vested options have put into building this impressive business, by allowing them to sell their shares in the private market. This is not just great news for current and former Cerebras employees but also for the company and its investors! Why? Liquidity typically leads to higher stock pricing, making it more attractive to investors. How so? The short answer is that when a stock is more liquid, its riskiness declines. When risk goes down, so does the discount rate (the cost of capital) that investors use to price the asset. When the discount rate goes down, all else equal, the price should go up! This enhanced liquidity and pricing can help a company with fundraising valuations, consolidating the cap table before an IPO, and bridging the valuation gap between an illiquid private market and a very liquid public market. Congratulations to Andrew and the Cerebras team for delivering on your promise to your employees and investors by allowing a liquid market for your stock. And bravo to your board members (which, according to PitchBook include Eric Vishria of Benchmark , Brad Gerstner of Altimeter, Steve Vassallo of Foundation Capital, Lior Susan of Eclipse, Thomas Laffont of Coatue, and Pierre Lamond) for supporting your vision! #secondarymarket #privatemarket #marketplace #unicorns #stockoptions
That looks like a solid trend. So true, an enhanced secondary market can be beneficial for a company in several ways. For instance, it can aid in consolidating the cap table before an IPO, attracting the best talent, and bridging the gap between an illiquid private market and a highly liquid public market. The ecosystem is blossoming; thanks for your contribution, Sim! 🌼
it's refreshing to see cerebras systems supporting their employees and investors. 💫🚀 #employeeempowerment Sim Desai
Sridhar Talanki
6mo
Andrew Feldman's approach at Cerebras Systems to allow employees to sell their shares is a strategic move that not only benefits individuals but also boosts the company's growth potential. This decision demonstrates a forward-thinking mindset that prioritizes employee well-being and investor confidence, Sim Desai!
Founder & CEO at Hiive
6moThis post is not a recommendation to purchase or sell securities and does not represent an offer or solicitation to do so. Investing in private stock is extremely risky and you should seek independent professional advice before doing so.