A partial exit is a liquidity event where a holder sells or converts only a portion of their position, not the entire investment.

How it works

Examples include a VC selling 30% of its stake in a secondary transaction while holding the rest for an IPO; a founder selling a small slice in a late-stage round primary-plus-secondary; or an investor taking cash in an M&A while rolling equity into the buyer. Partial exits appear in fund DPI metrics without fully closing the position.

Companies sometimes run tender offers letting employees and early investors sell a capped amount to new investors or the balance sheet. Pricing may discount the last primary round; board approval protects cap table stability.

Fund LPs may receive distributions from a partial exit while the GP retains carry on the remaining stake until full liquidation. DPI improves incrementally without closing the position on the fund’s books.

Why it matters

• Founders: Limited secondaries can reduce personal financial pressure without signaling a full departure—if sized modestly and disclosed properly to new investors.
• Investors: Partial exits return capital to LPs and manage fund life, especially when full exits take longer than vintage expectations.

Board approval and ROFR processes still apply to many partial founder secondaries.

Common mistake

Assuming any founder sale is a bad signal. Context matters—small, board-approved secondaries in large rounds differ from founders exiting most of their stake pre-IPO.

Related ideas

See secondary transactions, tender offers, DPI, and roll-over equity in acquisitions.