According to Fortune, crypto payments firm Mesh announced an $82 million Series B this year that included a $20 million direct payout to its founder, while blockchain social network Farcaster raised $150 million in Series A funding with its CEO taking at least $15 million off the table. These massive founder payouts happen through secondary sales where venture firms purchase the founder’s personal stock during funding rounds, a practice called “taking some off the table” in VC circles. During the 2021 crypto boom, OpenSea and MoonPay founders collected eight-figure payouts through similar arrangements. Both VCs and founders are reluctant to discuss the practice since it clashes with Silicon Valley’s ideal of the fully committed founder, but investors from smaller firms blame large crypto VCs for offering sweetheart secondary deals to win lead positions on hot deals.
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The new normal for hot startups
Here’s the thing – this isn’t just happening in crypto. While Fortune’s reporting focused on blockchain companies, it’s basically guaranteed that AI founders are doing the same thing right now. When markets get frothy and competition for deals heats up, VCs start throwing money at anything that moves. And part of that includes letting founders cash out early.
But does it actually matter? Venture investors claim that most crypto founders are already rich anyway, so an extra $15-20 million won’t change their work ethic. They also say they haven’t seen evidence that founders who hit early jackpots work less hard. And let’s be real – most venture bets fail anyway, so does it matter if some of that lost money went directly to a founder instead of into the company?
The uncomfortable reality
There’s definitely an ick factor here. Most people don’t resent Mark Zuckerberg’s wealth because Facebook changed how we connect. But a crypto founder getting filthy rich before building anything substantial? That feels different. One female founder pointed out another uncomfortable angle – these early payouts might reflect confidence in male founders that women don’t always receive.
And honestly, how many of us would act differently? If someone offered me $15 million to write columns nobody reads, I’d probably take the money. The real question is what happens when the music stops. VCs will absolutely regret some of these checks when the current boom ends. But then they’ll do it all over again during the next hot market. It’s the circle of venture life.
Beyond the founder payouts
While the founder cash-out trend grabs headlines, the broader market keeps moving. We’re seeing massive funding rounds in adjacent sectors too – Procurement Sciences just raised $30 million for AI-powered government contract automation, and CMT Digital pulled in $136 million for its fourth crypto fund. Meanwhile, established players are snapping up infrastructure companies, like CBRE’s $1.2 billion acquisition of Pearce Services.
The market’s sending mixed signals. On one hand, you’ve got VCs being incredibly cautious about valuations and due diligence. On the other, they’re handing founders life-changing money before there’s any proof the business will work. It’s a strange moment where risk tolerance seems both incredibly high and incredibly low at the same time.
