How Founders Can Stop VCs From Piling On With Co-Sale Agreements

Episode notes

Lucas and Luna break down the co-sale agreement — a term sheet clause that lets existing investors tag along when a founder sells shares to a third party. They explain how this clause can trap founders who want partial liquidity, using the example of an edtech startup that hit a 4x return but still couldn't cash out any shares without investor approval. The hosts walk through the negotiation dynamic, showing how co-sale rights are becoming more common as VCs try to protect themselves in a market where secondary sales are surging — up 40% in 2025 according to Forge Global data. Lucas shares a concrete tactic: asking for a minimum threshold like $5 million before co-sale kicks in, or an exception for the first 20% of shares sold. The conversation also touches on how recent public market moves — like Alphabet down 7.9% and Amazon down 9.2% over the past five days — are pushing more late-stage startups to explore partial exits, which makes this clause especially timely for founders and operators.