Investors have been pouring money into more mature startups. In some cases, they're encouraging founders to sell some of their stakes.
It's impossible to determine without more details on the transactions just how much of his stake Neumann sold in the moves. That's because they took place over the last five years, according to the report, and WeWork's valuation has soared over that time — going from $5 billion at the end of 2014 to $47 billion at the beginning of this year.
In prior times, before the influx of late-stage capital, companies of the age and maturity of WeWork would have already been public. Founders frequently sell parts of their stakes in an IPO; it used to be the first time that many of them got to see a windfall from the success of their companies. Investors have come to see moves such as Neumann's in a similar light, Plauche said. Had WeWork been public by now — as traditionally it would have been — he would have been able to cash in anyway.
But the trend is moving beyond just more mature startups to those that are earlier in their development, said Kristian Andersen, a partner with High Alpha, an Indianapolis-based venture studio. Investors have come to believe, from observing the growing number of cash outs at more mature startups, that there isn't as much risk as they may have previously thought in such moves, he said. And actually the startups may benefit from founders taking a little off the table, he said.
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