Subscribe: Apple Podcasts · Spotify · YouTube · Amazon Music · iHeartRadio · Pandora · RSS
Episode Summary
You built the company. You own most of it on paper. And the moment a key employee, a partner, or your own kid wants real money out of those shares, the whole thing turns into a smoke-filled room of bankers, lawyers, and broker-dealers charging 5-10% to make it move. Or it just sits there, illiquid, and everyone pretends that’s fine. I rolled into this conversation with Chris and Graham McConnell because they’re building something I hadn’t seen before: a walled-garden liquidity platform that gives a private company its own internal market, where shareholders (employees, family, invited outsiders) can post bids and asks on the company’s shares anonymously, settle the trades, and let price discovery actually happen. They’re using blockchain tokens stapled to an 1800s legal construct called a voting trust, which means you keep 100% of the votes while sharing the economic upside. We got into how the platform works, why fear of giving up control kills most internal equity plans before they start, how the SEC has actually been encouraging on this, and the real story of Chris’s friend Jennifer who listed her shares in smaller chunks at different prices and watched the market tell her what they were worth. If liquidity is the thing keeping you stuck, this one’s worth your time.
Watch on YouTube
## Top 10 Takeaways- If your shareholders have no path to liquidity, your equity is worth a fraction of what the spreadsheet says.
- The illiquidity discount on private shares runs 25-50%. Solve liquidity and you can unlock that value back.
- Options sitting in a drawer with no path to cash are not retention. They’re a promise nobody believes.
- You can share the economics of ownership without giving up a single vote if the structure is right.
- Price discovery happens when real buyers and sellers vote with dollars, not when an analyst justifies a number.
- List your shares in small chunks at different prices and let the market tell you what they’re worth.
- Your employees know your company-specific risk better than any outside valuator ever will.
- Most owners don’t need new investors. They need a way for the ones they already have to transact.
- The CEO peer network is an underused liquidity pool. Owners who know each other will fund each other.
- Compliance is not the wall you think it is. Reg 4(a)(1.5) and a voting trust open doors most owners never knew existed.
Sound Bites
“I’ve had equity issues throughout my entire career, starting with stock option plans that never became anything, to desperately wanting all of our employees to own shares and fighting with our board on that.” (@TBD) — Chris McConnell
“Employees that you give liquidity to fall so deeply in love with you and become so loyal to you that they’re never going anywhere.” (@TBD) — Chris McConnell
“The true valuation really comes out once you have buyers and sellers interacting and settling on that price.” (@TBD) — Graham McConnell
“This is about a bunch of people voting on the valuation, not some analyst sitting in a room trying to justify it.” (@TBD) — Chris McConnell
About This Episode
Chris and Graham McConnell are the father-son co-founders of Nth Round, a software platform that gives private companies their own internal liquidity marketplace using blockchain tokens and a voting trust structure. Chris brings decades of experience as a co-founder of CFM Technologies (taken public on NASDAQ in 1996), a hedge fund manager, and a board operator who shared space with a middle-market private equity firm. Graham came up through software and quantitative investment management at AJO Partners and Relay Network before partnering with his dad on Nth Round, which raised a $4.3M seed round backed by NEA. This episode lands in the iBD canon as an early-stage look at the liquidity problem every owner-operator eventually hits, and one of the more creative attempts to solve it.
Resources Mentioned
- Nth Round — Chris and Graham’s company. The liquidity platform discussed throughout the episode. — nthround.com
- BizEquity — Valuation firm based in Philadelphia that Nth Round has explored partnering with for shareholder pricing tools.
- Axial.net — Online marketplace for private company M&A, referenced as a parallel attempt to bring efficiency to private deals.
- NEA (New Enterprise Associates) — VC firm that backed Nth Round’s seed round.
- SEC Commissioner Hester Peirce — Referenced as a regulator who has been supportive of Nth Round’s approach.
- Ken Sanginario — Value Opportunity Profile — Referenced for his work on intrinsic vs. strategic valuation.
- Brent Beshore — The Messy Marketplace — Referenced for the messy human reality of private deals.
- GEXP Collaborative — Episode sponsor.
Connections
Phase + Module:
- Module 1 — Ownership Goals — Liquidity is the constraint that quietly shapes every other ownership decision
- Module 2 — Expand Knowledge — Understanding the real mechanics of equity, valuation, and transfer
- Module 8 — Executive Compensation — The case for real ownership over options that never pay out
Milestones:
- Milestone 4 — Owner’s Value (DCF) — Intrinsic value vs. what the market will actually pay
- Milestone 5 — Market Value — Price discovery when buyers and sellers actually transact
- Milestone 24 — Long-Term Value Plan — Where employee equity and liquidity paths get designed on purpose
Concepts referenced:
- Enterprise Value vs. Equity Value — What you own vs. what you can actually convert to cash
- The Multiple & WACC — The illiquidity discount lives in the multiple
- The Owner-Operator Trap™ — Equity locked in a company you can’t step away from
- Value Gap — The space between paper value and transactable value