High-growth AI companies are entering a new competitive era, one defined not only by technological ambition but by an escalating battle for senior engineering talent. Startups now recruit against public-market giants and mature private firms like OpenAI and SpaceX—organizations that offer both premium compensation and predictable liquidity. Against this backdrop, tender offers have shifted from optional perks to strategic necessities.
Recent transactions at Clay, Linear, and ElevenLabs highlight how quickly the model is evolving. Each company executed employee-wide tenders at multibillion-dollar valuations, signaling that liquidity is becoming an expected component of compensation. For fast-scaling teams, equity alone no longer anchors retention. Employees increasingly compare roles not just by salary and mission but by when and how they can realize value.
This reframing matters for investors. These tenders aren’t financial indulgences reminiscent of the late-stage exuberance of past cycles. They are targeted retention mechanisms designed to help companies compete at the highest level of the AI talent market—and in doing so, they are quietly rewriting the norms of private-market liquidity.
For many investors, the memory of 2021’s secondary boom still casts a long shadow. That period was defined by founder-centric liquidity events, often executed well before companies demonstrated durable business models. The crash of Hopin remains the most salient example: its founder reportedly sold $195 million in secondary shares, only for the company to unravel less than two years later. Those deals amplified investor skepticism about early liquidity and underscored the governance risks of allowing founders to derisk too early.
The 2026 wave looks fundamentally different. Rather than concentrating gains at the top, today’s tender offers distribute liquidity across engineering and operations teams. Clay’s recent transaction, for instance, was intentionally designed to give employees the ability to sell a small portion of their equity, not to enrich executives. Investors have taken note: the question is no longer whether a secondary occurred, but who benefited and why.
This shift matters for due diligence. Founder-heavy secondaries can signal misaligned incentives or looming performance concerns. Employee-focused tenders, by contrast, typically reflect confidence in long-term value creation. They are retention tools aimed at preserving continuity during periods of rapid expansion, not cash-outs that compromise commitment. As a result, the same mechanism—secondary sales—now carries different implications depending on its structure and beneficiaries.
With companies remaining private for a decade or longer, employees often face years of accruing equity without any realistic path to liquidity. That gap has become a major liability in the race for top AI researchers and senior technical leaders. Clay articulated this rationale directly, noting that it wanted to ensure gains "don’t just accumulate to a few people." The goal is both practical and cultural: reduce financial pressure on team members while deepening their attachment to the company’s trajectory.
Investors focused on secondary transactions echo this logic. Firms like NewView Capital describe moderate employee liquidity as a net positive, improving retention without meaningfully altering ownership dynamics. In high-growth environments—Clay’s ARR tripled over the past 18 months and its valuation rose sharply—tenders reinforce stability during a phase where turnover can derail momentum.
Competition further intensifies the need for these tools. Technical candidates weighing offers compare the reliability of future liquidity across employers. At public companies, the answer is straightforward. At private giants such as OpenAI and SpaceX, regular tender programs make the equity proposition nearly as attractive. For mid-stage startups without similar mechanisms, the gap becomes difficult to bridge—especially when the cost of losing a key engineer can far exceed the cost of offering partial liquidity.
By giving employees earlier access to returns, startups also reduce pressure to pursue exits prematurely. For some, that flexibility is critical. It allows companies to scale until market conditions favor an IPO or acquisition rather than rushing toward suboptimal timing simply to satisfy internal liquidity demands.
While employee tenders solve acute operational challenges, they introduce a structural tension for venture investors. Liquidity for employees can enable companies to defer IPOs well beyond the traditional timelines. That deferral, however rational from an operator’s perspective, extends the period during which venture funds remain locked into positions. With fewer realizations, distributions to limited partners slow, eroding DPI and weakening confidence in emerging funds.
This dynamic risks creating a feedback loop. LPs already value liquidity more heavily after prolonged periods of muted exits. If tenders become substitutes rather than complements to public listings or acquisitions, capital recycling slows even further. Reduced distributions can lead to constrained LP commitments in new fund cycles, ultimately diminishing the pool of capital available to startups—precisely the companies using tenders to maintain their competitive edge.
Some secondary specialists, including firms like Saints Capital, argue that these tensions are manageable and that the market will find equilibrium as secondary investors play a larger role in providing liquidity. Yet the scale of the shift raises important questions. How much liquidity can be absorbed by private secondary markets without distorting valuations? And at what point does continued deferral of traditional exits begin to erode the economic model that underpins the venture asset class?
For investors, the strategic dilemma is increasingly clear. Supporting employee tenders may be essential to sustaining growth in key portfolio companies. But each transaction also lengthens the journey to realizing returns. Balancing those competing imperatives—retention versus liquidity—will shape fund performance and venture market dynamics in the years ahead.
