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Freshworks founder Mathrubootham supports founders taking money in secondary sales

Girish Mathrubootham, the founder and executive chairman of Freshworks, has stated that he supports founders who use secondary share

Freshworks founder Mathrubootham supports founders taking money in secondary sales

Girish Mathrubootham, the founder and executive chairman of Freshworks, has stated that he supports founders who use secondary share sales to fund critical personal expenses and concentrate on developing and expanding their businesses.

“The majority of us have middle-class origins. Life has not given us enough money. Therefore, we consider it a terrific result when someone offers to buy you (our stake) for $5 million or $25 million for the first time. The adversary is that.

“”I’m an advocate for entrepreneurs to take some money from secondaries while their firm is scaling; they should take some money to take care of pressing personal issues like home loans, etc., so that their minds are free to hit out big,” Mathrubootham stated.

He was speaking on August 9 at the Moneycontrol Startup Conclave in Bengaluru during a panel discussion with Mithun Sacheti, the former CEO and founder of CaratLane. In a discussion led by Moneycontrol deputy executive editor Chandra R Srikanth, they were talking about “Chennai Super Kings: Building, Scaling, and Stepping Back: The Founder’s Arc.”

The habit of founders selling their interests in secondaries has caused a rift between investors and founders in a number of new-age companies.

Nitish Mittersain, the founder of Nazara Technologies, sold Plutus Wealth Management, a pre-IPO investor, a 6.38 percent stake in the company in May. In the startup community, there was considerable controversy about this move, but Mittersain clarified it during the company’s analyst call.

“We have been managing our business for the past 25 years as a promotional family. Because of the way the business has grown, we have never had a lot of liquidity. Therefore, getting some money was crucial for the promoter family at some point. “The business will continue to be fully controlled by the promoters,” Mittersain stated when addressing the Q4 and FY24 results.

Co-founders Swiggy Sriharsha Majety and Nandan Reddy, along with a few other staff members, intend to sell shares in the impending $65 million employee stock ownership plan (ESOP) liquidity event program.

The founders of Mamaearth, Varun Alagh and Ghazal Alagh, sold about 32.86 lakh of the 10.67 crore shares they had in the beauty and personal care brand.

In a similar vein, Supam Maheshwari, the managing director and founder of FirstCry, sold off 6.2 million shares before the company’s January IPO filing.

An epilogue in Ashneer Grover’s book Doglapan, which was published on X (previously Twitter) in 2022, caused investors and entrepreneurs to argue. Grover was the founder of BharatPe.

Grover counseled founders to put their financial security first and seize every chance to sell their stock through secondary markets.

“Typically, at least 80% of the proceeds from any secondary sale should be allocated to the founders, with the remaining 20% going to ESOP holders and angel investors,” said Grover.

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