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.

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.

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?