And further on the topic of increased liquidity, the always-observant Mark Suster has a terrific piece on why company founders should be able to take some equity off the table once their firm has reached reasonable milestones. His point is simple, but often overlooked: the alignment between investors and founders breaks down at some midway point between investment and exit.  Why?  Entrepreneurs are concentrated; VC firms are diversified.

Company founders have steep liquidity cliffs: they generally only realize a significant payday in the event of a sale or IPO, yet they almost always take salaries at below market value to preserve their equity.  In contrast, venture firms receive a 2% carry off their fund (for expenses, including salaries) and have a portfolio of investments that pay out at different times.   These separate paths, once diverged, do not easily rejoin.

Critical here is that the founders receiving liquidity are still key to the company’s success, and there must be considerable upside remaining in the company.  This is also not “buy a plane” money — but it might be “buy a house” money. After all, a recent Kaufman Foundation study found the average age of technology company founder is 39.  Um, take that, Marc Zuckerberg.