Inside The Private-Market Divide: EquityZen’s Phil Haslett On AI, SaaS And Secondaries

The New Reality of Paper Wealth

For a long time, the deal in tech was simple: you build, you sweat, and in seven to ten years, you go public or get bought. That timeline has been shattered. We are now looking at companies staying private for fifteen years or longer. For a founder or an early engineer, that is a lifetime to wait for a paycheck that might never come. This is why the secondary market, once a dark corner of finance, has become the primary pulse of the ecosystem.

Phil Haslett over at EquityZen recently shed some light on this shift, and it is something every builder needs to understand. We are seeing a massive divide between what a company says it is worth on a pitch deck and what the actual market is willing to pay for its shares today. If you are building in AI or SaaS, you are living in two different economic universes.

The Two-Tiered Market

If you look at the numbers, the demand is lopsided. AI is the only sector where people are still willing to pay a premium for growth. Everything else, especially traditional SaaS, is being valued with a level of skepticism we haven't seen in a decade. Investors are no longer buying the 'growth at all costs' narrative. They want to see a clear path to profitability, or at least a defensible moat that isn't just a wrapper around an API.

For founders, this creates a weird tension. You might have a valuation from your last round that makes you a unicorn on paper, but the secondary market might be pricing your shares at a 40% or 50% discount. That is a hard pill to swallow, but it is the honest truth. The secondary market is a truth machine. It reflects what people actually think your company is worth when the hype is stripped away and real dollars are on the line.

Why Builders Should Care About Liquidity Early

We used to think that letting employees sell shares early was a sign of weakness. It signaled that you didn't believe in the long-term vision. That mindset is dead. Today, providing liquidity is a retention tool. If your lead developer has been with you for five years and has a million dollars in paper wealth but can't afford a down payment on a house, they are going to burn out or leave for a high-paying role at a Big Tech firm.

Smart founders are now baking secondary sales into their growth plans. They are letting early employees and investors take some chips off the table. This keeps the team focused on the long game because the immediate financial pressure is gone. It also cleans up your cap table. Getting smaller, disgruntled investors out and bringing in institutional buyers who are willing to wait another five years for an exit is a strategic move.

The AI Hype vs. The SaaS Slog

The secondary market shows a clear preference for AI, but even that has its limits. We are seeing a lot of 'tourist' capital flowing into AI startups, which inflates valuations. However, the secondary buyers—the ones who do this for a living—are being much more surgical. They are looking for the infrastructure plays, the companies that own the data, and the ones that are actually integrated into workflows.

Meanwhile, SaaS companies are being treated like utilities. The multiples have compressed. If you are building a SaaS product today, you aren't being valued on your potential to change the world; you are being valued on your churn rate and your customer acquisition cost. The secondary market is reflecting this by demanding much higher discounts for SaaS shares compared to AI shares. It is a sobering reminder that the 'easy money' era of 2021 is long gone.

Navigating the IPO Drought

The elephant in the room is the lack of IPOs. Without a clear exit path, the secondary market becomes the only game in town. Companies are staying private longer not because they want to, but because the public markets are demanding a level of financial discipline that many startups simply haven't achieved yet. This 'private for longer' trend means that liquidity events need to happen in the interim.

If you are a founder, you need to be proactive about this. Don't wait for your employees to come to you begging for a way to sell shares. Set up a structured program. Work with platforms that specialize in this. It allows you to control the price and the messaging. If you let it happen in the shadows, you risk losing control of your valuation and your narrative.

What This Means for the Future

The rise of secondaries is a sign of a maturing market. It means we are moving away from the 'all or nothing' gamble of the early 2000s. It provides a way for the ecosystem to recycle capital. When an early investor sells their shares to a secondary buyer, that capital often goes right back into a new seed-stage startup. It keeps the engine running even when the IPO window is slammed shut.

For builders, the takeaway is clear: focus on real value. The secondary market is much harder to fool than a VC looking for the next big thing. If you want your shares to hold their value, you need to build a business that makes sense on a spreadsheet, not just a slide deck. The transparency provided by these private exchanges is a gift, even if the price they show you isn't the one you wanted to see.

The secondary market is the ultimate reality check for the private sector. It turns hypothetical wealth into actual market sentiment.

Founder Takeaways

• Secondary pricing is your real valuation. Ignore the headline numbers from your last round; look at what buyers are actually paying for shares today.
• Liquidity is a feature, not a bug. Providing paths for early employees to de-risk their lives keeps them motivated for the long haul.
• AI is the current outlier. Expect higher valuations and more demand, but be prepared for a correction if you can't show actual utility.
• Clean up your cap table. Use secondary rounds to transition from early-stage investors to late-stage institutional partners who have the patience for a long-term exit.

Ultimately, the divide in the private market is a reflection of a world that has grown weary of promises. Whether you are building in AI or SaaS, the market is asking for proof. The secondary market is simply where that proof is priced.

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