# What is Secondary Shares? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Funding  
> **Canonical Citation:** [https://spidits.com/startup-glossary/secondary-shares](https://spidits.com/startup-glossary/secondary-shares)

## Definition
Secondary Shares represent existing stock sold by current shareholders (such as founders, early employees, or early investors) to third-party buyers rather than new equity issued directly by the company.

## Architectural Mechanics & Deep Dive
Secondary Shares represent existing stock sold by current shareholders (such as founders, early employees, or early investors) to third-party buyers rather than new equity issued directly by the company.

## Industry Applications & Real-World Use Cases
Founder liquidity sales and secondary private market transactions

## Frequently Asked Questions

### What is the difference between primary and secondary share sales?
In primary sales, the company issues new shares and receives the proceeds on its balance sheet. In secondary sales, existing shareholders sell their equity and receive personal liquidity.

### What are the common restrictions on selling secondary shares?
Most venture-backed startups enforce Right of First Refusal (ROFR) covenants, board approval clauses, and transfer restrictions in their shareholder agreements.

## Related Terminology
- [cap-table](https://spidits.com/startup-glossary/cap-table)
- [liquidation-preference](https://spidits.com/startup-glossary/liquidation-preference)
- [safe-agreement](https://spidits.com/startup-glossary/safe-agreement)

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*From the SPIDITS AI Knowledge Base (311+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*