Harvest Without Walking Away: Partial Liquidity Explained

For many founders, “exit” sounds like one thing: selling the whole company and stepping away.

But there’s another path that’s becoming more common, especially for founders who still love the business and see more growth ahead:

Partial liquidity.

You “harvest” some value today, without walking away tomorrow.

What is partial liquidity?

Partial liquidity usually means a founder sells a portion of their shares (often called a secondary sale) to an investor, while keeping meaningful ownership and continuing to run the company.

In plain terms:

• You take some chips off the table

• You reduce personal financial risk

• You keep building (often with more energy and clarity)

It’s not quitting. It’s smart risk management.

Why founders do it

Most founders have a hidden risk concentration: their time, income, and net worth are all tied to a single illiquid asset, the business.

Partial liquidity helps when you want to:

• de-risk personally (house, family, life goals, peace of mind)

• avoid “forced decisions” later (selling under pressure)

• stay motivated for the next phase (without feeling like it’s all-or-nothing)

• bring in a strong partner without handing over control

A calmer founder often builds a stronger company.

Common ways partial liquidity happens

1) Secondary sale during a growth investment

An investor puts money into the company for growth and buys some shares from the founder.

2) Recapitalisation

A PE or strategic partner acquires a meaningful stake. Part goes into the business, part goes to the founder(s).

3) Strategic investor buys a minority stake

Less common, but powerful if the investor brings distribution, credibility, or capabilities and provides some founder liquidity.

When partial liquidity makes the most sense

Partial liquidity can be a great fit when:

• The business is performing well and has strong prospects

• the founder wants to stay involved

• There’s still a big growth journey ahead

• The founder’s personal risk exposure is too high

• The company needs capital or a partner to scale faster

The best time to harvest is usually when the business is healthy — not when you’re desperate.

What investors will look at (the “no surprises” list)

Even in partial liquidity, investors still underwrite like a serious deal. Expect focus on:

• quality and durability of revenue

• customer concentration and retention

• margins and cash conversion

• reliance on the founder

• strength of the leadership team

• clean financial reporting and defensible adjustments

• clear growth plan (not just a story)

Partial liquidity is easier when the business is already “exit-ready.”

The trade-offs (be clear-eyed)

Partial liquidity isn’t free money. The usual trade-offs include:

• You may take some governance oversight (board, reporting cadence)

• Your future flexibility could narrow (investor rights, consent matters)

• You’ll likely commit to performance targets (informally or formally)

• Pricing may reflect risk discounts if the business isn’t prepared

A good structure aligns incentives without squeezing the founder.

A simple way to think about it

Partial liquidity answers a very practical question:

“How can I reduce risk and reward my effort — while still keeping the upside?”

For many founders, that’s the most founder-friendly version of “exit.”

Quick self-check: Are you a candidate?

You’re generally in the right zone if:

• You want to keep leading the business for 2–5 more years

• The company has predictable performance and a believable growth plan

• You can explain your numbers clearly (and defend them)

• The business isn’t 100% dependent on you to operate

Closing thought

You don’t need to choose between selling everything and taking nothing.

Partial liquidity lets you harvest part of what you’ve built, protect your downside, and keep playing for upside.

If “exit” is a strategy, partial liquidity is often the most practical first step.