Double Compression™
When a company's valuation and a founder's personal liquidity timeline both tighten at once, the effects don't add. They compound.
Two different kinds of compression can happen to a founder at the same time — and when they do, the effect isn’t additive. It’s compounding.
Valuations move. Financing conditions tighten. A round can price lower than the last one, or take longer to close than planned. This is compression at the company level — it changes what a founder’s equity is worth, on paper, at any given moment.
Independently of valuation, the timing of liquidity can also compress. An expected financing slips. A tender offer doesn’t materialize. An IPO window narrows or closes. This is compression of when — not just what — a founder can expect to realize anything from that equity.
A founder whose personal balance sheet depends entirely on company equity can be exposed to both forms of compression at once — the value of the position and the timeline for accessing it, moving against the founder simultaneously. Personal financial decisions made assuming the value or the timeline is fixed can rest on assumptions that no longer hold once both compress together.
The architecture question isn’t whether compression can happen. It’s whether a founder’s personal financial position depends on it not happening.