Business

Founders are getting huge paydays before their startups are close to an exit—and that’s fine with many VCs

Published

1 month ago

November 6, 2025

Good morning, it’s Crypto Editor Jeff Roberts pinch-hitting for Allie. Over the course of my career, I’ve written many stories along the lines of “Buzzy new startup raises $50 million.” Imagine my surprise then when I learned that, in recent years, those splashy headline numbers are not always what they seem. In a growing number of deals, it turns out, a chunk of the money raised doesn’t go to the startup, but instead into the pockets of the founder.

That was the case with crypto payments firm Mesh, which announced an $82 million Series B this year that included a $20 million payout to its founder. Ditto with the blockchain social network firm Farcaster, which raised an eye-popping $150 million Series A, but saw its CEO carve off at least $15 million of that. You can read about other examples here.

These payouts—which are totally above board—take place by means of secondary sales that involve venture firms purchasing some of the founder’s personal stock during a round. In VC-speak, the practice is called “taking some off the table” and it’s common during frothy markets. During the crypto boom that tailed off in 2021, for instance, the founders of firms like OpenSea and MoonPay collected eight-figure payouts.

VC firms and founders, unsurprisingly, are not eager to talk about the practice. After all, cashing in early clashes with the Silicon Valley ideal of the founder who would never dream of selling their stock because they are so sure their startup is going all the way. It’s not unusual for founders to sell some shares at a later stage “so they don’t have to worry about the mortgage,” in the words of one VC, but an eight-figure Series A or B payday—well before it’s clear a startup will succeed—feels different.

When I spoke with investors from small firms, they blamed large crypto VC firms for dangling sweetheart secondary arrangements in order to be the lead on a deal. A person at one of those large firms, in turn, blamed generalist firms charging into the crypto market for the proliferation of these arrangements.

My reporting focused on crypto deals, but it’s a safe bet that founders in other hot sectors like AI are also “taking some off the table” in early rounds. The question is whether this matters.

Venture investors told me that many crypto founders are rich already, so a big Series A payout is unlikely to undermine the incentive they have to build their company. They also claimed they’ve seen no evidence that a founder who hits an early jackpot will grind less hard than one who hasn’t. And, after all, the nature of venture is that most bets don’t work out so does it matter if one portion of a losing bet on a portfolio company went to a founder?

Still, there is an ick factor. Most Americans don’t begrudge Mark Zuckerberg or Jeff Bezos for being obscenely wealthy since, well, they built awesome companies used by everyone. But do they feel the same about a crypto founder who gets filthy rich without building anything of note? The situation is also awkward since, as one female founder wrote me, these early stage payouts may reflect a vote of confidence in men that is not always extended to women.

Venture capital, of course, is hardly the only realm where people can get very rich without accomplishing much. In the sports world, my poor Toronto Blue Jays—reeling from a brutal Game 7 loss to the Dodgers—paid $27 million this year to slugger Anthony Santander only to see him post negative returns (WAR in baseball terms). That’s just how it goes.

And while it’s tempting to raise eyebrows against overpaid startup founders, how many of us would act any differently? If someone offered me $15 million to write columns about venture capital and nobody read them, I don’t know if I’d feel bad. What I do know is that, when the current boom time ends, VCs will rue some of the big checks they wrote to unproven founders. And then they will do it all over again during the next hot market.

Jeff John Roberts
X: @jeffjohnroberts
Email: jeff.roberts@fortune.com
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VENTURE DEALS

– Reevo, a Santa Clara, Calif.-based AI-powered revenue operating system, raised $80 million in funding. Khosla Ventures and Kleiner Perkins led the round.

– Upway, a Los Angeles, Calif. and Brooklyn, N.Y.-based refurbished e-bike company, raised $60 million in Series C funding. A.P. Moller led the round and was joined by Galvanize, Ora Global, and others.

– Inception, a Palo Alto, Calif.-based platform for developing AI models, raised $50 million in funding. Menlo Ventures led the round and was joined by Mayfield, Innovation Endeavors, NVentures, and others.

– DeepJudge, a Zurich, Switzerland-based company developing search engines for law firms, raised $41.2 million in Series A funding. Felicis led the round and was joined by Coatue.

– Daylight, a Tel Aviv, Israel-based agentic AI-powered managed security services company, raised $33 million in Series A funding. Craft Ventures led the round and was joined by Bain Capital Ventures, Maple VC, and others.

– Procurement Sciences, a Washington, D.C.-based AI-powered platform designed to automate the processes for businesses to secure and fulfill government contracts, raised $30 million in Series B funding. Catalyst Investors led the round and was joined by others.

– DualBird, a Westborough, Mass.-based data infrastructure company, raised $25 million in combined seed and Series A funding. Lightspeed Venture Partners led the round and was joined by Bessemer Venture Partners, Angular Ventures, and Uncork Capital.

– Parable, a Brooklyn, N.Y.-based intelligence layer for enterprise operations, raised $16.5 million in seed funding. HOF Capital led the round and was joined by Story Ventures, InMotion Ventures, and others.

– Evotrex, a Los Angeles, Calif.-based smart, power-generating RV company, raised $16 million in pre-Series A funding from Unity Ventures, Kylinhall Partners, and others.

– Ridepanda, a San Francisco-based company providing e-bikes as an employer sponsored benefit, raised $12.6 million in funding from Bikeleasing Group, Blackhorn Ventures, Yamaha Motor Ventures, and others.

– Fintary, a San Francisco-based AI-powered revenue growth platform, raised $10 million in Series A funding. Infinity Ventures led the round and was joined by Sierra Ventures and others.

– Malanta, a Makabim-Re’ut, Israel-based AI-powered pre-attack prevention platform, raised $10 million in seed funding. Cardumen Capital led the round and was joined by The Group Ventures.

– Tsuga, a Paris, France-based AI-powered observability company, raised $10 million in seed funding. General Catalyst led the round and was joined by Singular.

– Hepta, a Foster City, Calif.-based company using AI and analysis of cell-free DNA to identify chronic disease, raised $6.7 million in seed funding. Felicis Ventures and Illumina Ventures led the round and were joined by SeaX Ventures, Alumni Ventures, and AME Cloud Ventures.

– Freeda, a Paris, France-based company using AI to find errors in construction plans, raised €3.4 million ($3.9 million) in funding. Frst led the round and was joined by Brick & Mortar Ventures.

– OneLot, a Manila, Philippines-based financing platform for used car dealers, raised $3.3 million in seed funding. Accion Ventures and 468 Capital led the round and were joined by Everywhere Ventures, Seedstars, and others.

– Planbase, a San Francisco-based AI-powered employee management platform, raised $2.1 million in funding from Y Combinator, LocalGlobe, and angel investors.

PRIVATE EQUITY

– CBRE acquired Pearce Services, a Paso Robles, Calif.-based provider of advanced technical services for digital and power infrastructure, for approximately $1.2 billion in cash.

– Axiom GRC, backed by Inflexion, acquired IS Partners, a Philadelphia, Penn.-based cyber assurance and compliance services company. Financial terms were not disclosed.

– Bid Equity acquired Cuseum, a Boston, Mass.-based provider of visitor and member engagement software for museums and institutions. Financial terms were not disclosed.

– Global Guardian, backed by Align Capital Partners, acquired Solace Global Risk, a Poole, U.K.-based risk management and security services company. Financial terms were not disclosed.

– TPG agreed to acquire a 70% stake in Kinetic, a Melbourne, Australia-based bus and mass transit operator. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

– CMT Digital, a Chicago, Ill.-based venture capital firm, raised $136 million for its fourth fund focused on companies building the infrastructure and applications for cryptocurrency adoption.

– MVP Ventures, a San Francisco-based venture capital firm, raised $125 million for its second fund focused on companies in AI, defense, and frontier tech.

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Business

Hegseth likens strikes on alleged drug boats to post-9/11 war on terror

Published

7 minutes ago

December 6, 2025

Jace Porter

Defense Secretary Pete Hegseth defended strikes on alleged drug cartel boats during remarks Saturday at the Ronald Reagan Presidential Library, saying President Donald Trump has the power to take military action “as he sees fit” to defend the nation.

Hegseth dismissed criticism of the strikes, which have killed more than 80 people and now face intense scrutiny over concerns that they violated international law. Saying the strikes are justified to protect Americans, Hegseth likened the fight to the war on terror following the Sept. 11, 2001 attacks.

“If you’re working for a designated terrorist organization and you bring drugs to this country in a boat, we will find you and we will sink you. Let there be no doubt about it,” Hegseth said during his keynote address at the Reagan National Defense Forum. “President Trump can and will take decisive military action as he sees fit to defend our nation’s interests. Let no country on earth doubt that for a moment.”

The most recent strike brings the death toll of the campaign to at least 87 people. Lawmakers have sought more answers about the attacks and their legal justification, and whether U.S. forces were ordered to launch a follow-up strike following a September attack even after the Pentagon knew of survivors.

Though Hegseth compared the alleged drug smugglers to Al-Qaida terrorists, experts have noted significant differences between the two foes and the efforts to combat them.

Hegseth’s remarks came after the Trump administration released its new national security strategy, one that paints European allies as weak and aims to reassert America’s dominance in the Western Hemisphere.

During the speech, Hegseth also discussed the need to check China’s rise through strength instead of conflict. He repeated Trump’s vow to resume nuclear testing on an equal basis as China and Russia — a goal that has alarmed many nuclear arms experts. China and Russia haven’t conducted explosive tests in decades, though the Kremlin said it would follow the U.S. if Trump restarted tests.

The speech was delivered at the Reagan National Defense Forum at the Ronald Reagan Presidential Foundation and Institute in California, an event which brings together top national security experts from around the country. Hegseth used the visit to argue that Trump is Reagan’s “true and rightful heir” when it comes to muscular foreign policy.

By contrast, Hegseth criticized Republican leaders in the years since Reagan for supporting wars in the Middle East and democracy-building efforts that didn’t work. He also blasted those who have argued that climate change poses serious challenges to military readiness.

“The war department will not be distracted by democracy building, interventionism, undefined wars, regime change, climate change, woke moralizing and feckless nation building,” he said.

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Business

US debt crisis: Most likely fix is severe austerity triggered by a fiscal calamity

Published

38 minutes ago

December 6, 2025

Jace Porter

One way or another, U.S. debt will stop expanding unsustainably, but the most likely outcome is also among the most painful, according to Jeffrey Frankel, a Harvard professor and former member of President Bill Clinton’s Council of Economic Advisers.

Publicly held debt is already at 99% of GDP and is on track to hit 107% by 2029, breaking the record set after the end of World War II. Debt service alone is more than $11 billion a week, or 15% of federal spending in the current fiscal year.

In a Project Syndicate op-ed last week, Frankel went down the list of possible debt solutions: faster economic growth, lower interest rates, default, inflation, financial repression, and fiscal austerity.

While faster growth is the most appealing option, it’s not coming to the rescue due to the shrinking labor force, he said. AI will boost productivity, but not as much as would be needed to rein in U.S. debt.

Frankel also said the previous era of low rates was a historic anomaly that’s not coming back, and default isn’t plausible given already-growing doubts about Treasury bonds as a safe asset, especially after President Donald Trump’s “Liberation Day” tariff shocker.

Relying on inflation to shrink the real value of U.S. debt would be just as bad as a default, and financial repression would require the federal government to essentially force banks to buy bonds with artificially low yields, he explained.

“There is one possibility left: severe fiscal austerity,” Frankel added.

How severe? A sustainable U.S. debt trajectory would entail elimination of nearly all defense spending or almost all non-defense discretionary outlays, he estimated.

For the foreseeable future, Democrats are unlikely to slash top programs, while Republicans are likely to use any fiscal breathing room to push for more tax cuts, Frankel said.

“Eventually, in the unforeseeable future, austerity may be the most likely of the six possible outcomes,” he warned. “Unfortunately, it will probably come only after a severe fiscal crisis. The longer it takes for that reckoning to arrive, the more radical the adjustment will need to be.”

The austerity forecast echoes an earlier note from Oxford Economics, which said the expected insolvency of the Social Security and Medicare trust funds by 2034 will serve as a catalyst for fiscal reform.

In Oxford’s view, lawmakers will seek to prevent a fiscal crisis in the form of a precipitous drop in demand for Treasury bonds, sending rates soaring.

But that’s only after lawmakers try to take the more politically expedient path by allowing Social Security and Medicare to tap general revenue that funds other parts of the federal government.

“However, unfavorable fiscal news of this sort could trigger a negative reaction in the US bond market, which would view this as a capitulation on one of the last major political openings for reforms,” Bernard Yaros, lead U.S. economist at Oxford Economics, wrote. “A sharp upward repricing of the term premium for longer-dated bonds could force Congress back into a reform mindset.”

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Business

The $124 trillion Great Wealth Transfer is intensifying as inheritance jumps to a new record

Published

2 hours ago

December 6, 2025

Jace Porter

Nearly $300 billion was inherited this year as the Great Wealth Transfer picks up speed, showering family members with immense windfalls.

According to the latest UBS Billionaire Ambitions Report, 91 heirs inherited a record-high $297.8 billion in 2025, up 36% from a year ago despite fewer inheritors.

“These heirs are proof of a multi-year wealth transfer that’s intensifying,” Benjamin Cavalli, head of Strategic Clients & Global Connectivity at UBS Global Wealth Management, said in the report.

Western Europe led the way with 48 individuals inheriting $149.5 billion. That includes 15 members of two “German pharmaceutical families,” with the youngest just 19 years old and the oldest at 94.

Meanwhile, 18 heirs in North America got $86.5 billion, and 11 in South East Asia received $24.7 billion, UBS said.

This year’s wealth transfer lifted the number of multi-generational billionaires to 860, who have total assets of $4.7 trillion, up from 805 with $4.2 trillion in 2024.

Wealth management firm Cerulli Associates estimated last year that $124 trillion worldwide will be handed over through 2048, dubbing it the Great Wealth Transfer. More than half of that amount will come from high-net-worth and ultra-high-net-worth people.

Among billionaires, UBS expects they will likely transfer about $6.9 trillion by 2040, with at least $5.9 trillion of that being passed to children, either directly or indirectly.

While the Great Wealth Transfer appears to be accelerating, it may not turn into a sudden flood. Tim Gerend, CEO of financial planning giant Northwestern Mutual, told Fortune’s Amanda Gerut recently that it will unfold more gradually and with greater complexity.

“I think the wealth transfer isn’t going to be just a big bang,” he said. “It’s not like, we just passed peak age 65 and now all the money is going to move.”

Of course, millennials and Gen Zers with rich relatives aren’t the only ones who sat to reap billions. More entrepreneurs also joined the ranks of the super rich.

In 2025, 196 self-made billionaires were newly minted with total wealth of $386.5 billion. That trails only the record year of 2021 and is up from last year, which saw 161 self-made individuals with assets of $305.6 billion.

But despite the hype over the AI boom and startups with astronomical valuations, some of the new U.S. billionaires come from a range of industries.

UBS highlighted Ben Lamm, cofounder of genetics and bioscience company Colossal; Michael Dorrell, cofounder and CEO of infrastructure investment firm Stonepeak; as well as Bob Pender and Mike Sabel, cofounders of LNG exporter Venture Global.

“A fresh generation of billionaires is steadily emerging,” UBS said. “In a highly uncertain time for geopolitics and economics, entrepreneurs are innovating at scale across a range of sectors and markets.”

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