Liquidity Event
Definition
A liquidity event is any transaction converting illiquid shares into cash or tradable stock: acquisition, IPO, or a significant secondary sale.
How it comes up in fundraising
SAFEs and preferences define what happens in a liquidity event; employees and founders usually wait for one to realize equity value.
Frequently asked questions
What triggers a SAFE in a liquidity event?
Standard SAFEs pay the greater of the investment amount or the converted value when the company is acquired before a priced round.
Can employees get liquidity before an exit?
Sometimes, via company-organized secondary sales or tender offers at later stages.
Cite this term
Round Funded. "Liquidity Event." Startup Fundraising Glossary.
Stable URL, it will not change: https://www.roundfunded.com/en/glossary/liquidity-event
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