Exceptional Founder Liquidity Fund

Being a founder is the
loneliest bet
in business.

More than 60% of startups fail. Even the ones that succeed take a decade or more to deliver any liquidity. The EFLF was built to change that — giving exceptional early-stage founders increased upside, earlier access to liquidity, and real downside protection. Even if your startup doesn't make it.

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The Problem

How the EFLF stacks up.

Chance of
Losing Money
Time to
Liquidity
Discount on
Secondary Sale
Without
EFLF
>60%
Of seed-stage startups fail — most founders walk away with nothing.1
14+ yrs
Average time from founding to IPO. Your net worth is a number on a cap table that won't pay your mortgage.2
30–50%
Discount you'd take doing a solo secondary sale — if you could find a buyer at all. The odds are stacked against you.3
With
EFLF
<5%
Chance of losing money in the pool.4
~2–3 yrs
Until you can borrow against your EFLF holding.†
10–20%
Discount when selling your EFLF stake.5
"If you want to go fast, go alone.
If you want to go far, go together."
The Solution

Strength in numbers.
A pool that works for you.

The core insight behind the EFLF is deceptively simple: a single startup is a concentrated, all-or-nothing bet. A pool of 100–300 startups at the same early stage is something fundamentally different — a diversified portfolio where the mathematics of power-law returns means your expected returns actually go UP while your likelihood of losing money go DOWN.

By pledging a small slice of your founder shares into the EFLF, you exchange concentrated risk for portfolio exposure — without losing your voting rights or creating a taxable event.

And because the EFLF is structured specifically around elite founders at the earliest possible stage, the math works in your favor powerfully. If you try this with lower quality startups, or later stage companies, the power law actually works against you. That's why Rising Tide's EFLF is a unique offering in the market - it's the proverbial unicorn: higher expected returns, lower downside risk, and earlier access to liquidity.

Step 01
Pledge up to 10% of your seed-stage founder shares
No tax consequences at the time of the pledge. Your voting rights are fully retained. You remain in control of your company.
Step 02
Receive EFLF ownership for the same dollar value
Your shares are pooled with up to 300 other YC startups. You now hold a stake in the collective — not just your own company.
Step 03
The pool's math starts working for you immediately
As the pool grows, your expected return increases and your probability of losing value asymptotically approaches zero — even if your own startup fails.
Step 04
Unlock three paths to earlier liquidity as the pool grows
Borrowing, secondary sales, and tax-optimised ETF conversion each become available at defined NAV milestones† — long before a traditional exit, and remain available even if our own startup has failed.
The Math

Why bigger pools mean
better outcomes for you.

Return distribution — by pool size
How MOIC percentiles shift as the pool grows at the default α = 2.42 calibration. The median crosses 1× (break-even) around 10 companies and approaches 1.5× by 200; the mean holds steady at ~1.57× while variance collapses. To see the regime where the mean itself rises with pool size, slide α below 2 in the live simulator.
Representative data calibrated to AngelList early-stage venture distribution at default α = 2.42 (Othman, 2019; Koh & Othman, 2020). Run the live 5,000-path simulator and adjust α to explore the empirical α < 2 regime.
Probability of losing money — by pool size
How often a pool of n seed-stage startups returns less than 1× capital, at a 65% failure rate — consistent with historical AngelList data. A pool of 150 companies takes the chance of losing money below 10%; 400 companies takes it under 1%.
Representative data calibrated to AngelList early-stage venture distribution at default α = 2.42 (Othman, 2019; Koh & Othman, 2020). Run the live 5,000-path simulator and adjust α to explore the empirical α < 2 regime.

Startup returns don't follow a bell curve. They follow a power law — a tiny number of companies generate almost all of the returns, and missing even one of those winners has an outsized negative impact on your outcome. Put simply — larger pools just increase the chance of including one of those huge winners.

Research by Abraham Othman, Ph.D. at AngelList, analysing over 3,000 early-stage investments, quantified this precisely: at the seed stage, returns follow a power law with α ≈ 2.42 (Othman, 2019). A follow-up study of 10,665 real LP portfolios on AngelList (Koh & Othman, 2020) provides direct empirical evidence that, in practice, seed portfolios behave as if α < 2 — investors with more holdings see mean returns continue to climb with portfolio size, not just variance shrink.

The chart above uses the more conservative α = 2.42 baseline. Even there, the lower-risk half of the story is fully captured: median return rises from 0× at a single company to ~1.5× at 200 companies, and the chance of losing money collapses from 76% to ~5%. The upper half — the regime where mean return itself rises with pool size — is what Koh & Othman's empirical data supports, and is what the α < 2 slider position in the live simulator illustrates. Either way, this kind of variance-and-tail capture is almost unheard of in financial markets — and is only available to people with positions in hundreds of seed-stage companies. The EFLF brings that access to startup founders.

Most importantly — this property is unique to the earliest stages of startup life. By Series B or C, the distribution has normalised (α > 3) and the effect disappears. The EFLF targets founding-stage startups specifically because the math only works at that stage. In other words, this is a use-it-or-lose-it opportunity. Once your company is past the founding stage, the math turns against you, and joining a pool like this loses many of its significant advantages.

Don't believe us? Run the live 5,000-path Monte Carlo yourself
How It Works

Four superpowers.
One structure.

The EFLF delivers downside protection from day one; then unlocks three additional early liquidity paths as the pool grows — each triggered by a clear NAV milestone.†

Superpower 01 — Active from day one
Downside protection.
Even if your company fails, you still hold shares in a pool of 100–300 other elite seed-stage companies. The power-law mathematics of the pool mean that even a small number of outsized winners is enough to protect — and grow — the value of your stake.

For the first time, your worst case is no longer zero. The pool is your safety net, built in from the moment you join.
Without EFLF
Your startup fails → $0. Years of work, gone.
With EFLF
Your startup fails → You still hold 100–300 elite seed-stage companies. Your stake retains value.
Superpower 02 — Pool reaches $200M NAV†
Access debt at institutional rates.
Once the pool crosses $200M NAV, it becomes large and diversified enough to serve as collateral for institutional debt financing. Rising Tide arranges a debt facility allowing you to borrow against your EFLF stake at institutional rates — the kind of rates typically reserved for large endowments and family offices, not individual founders.

You get liquidity without selling, without triggering a taxable event, and without giving up your position in the pool — even if your own startup has failed.
Without EFLF
After startup failure: personal loans at retail rates, or nothing at all.
With EFLF
Borrow against a diversified pool of elite startups at institutional rates — even if your company failed.
Superpower 03 — Pool reaches $300M NAV†
Sell years before an IPO.
Traditional secondary sales are only available once your startup is worth billions — and you'll take a 30–50% discount, if you can find a buyer at all.

In contrast, once the EFLF pool crosses $300M NAV, because we understand the portfolio math intimately, Rising Tide's in-house Secondaries fund will purchase your EFLF stake at a significantly better price — a 10–15% discount, regardless of whether your own startup has succeeded or failed.
Traditional secondary
30–50% discount. Requires your startup to be worth billions. Hard to find a buyer.
EFLF secondary
10–15% discount. Available at $300M pool. Works even if your startup failed.
Superpower 04 — Pool reaches $500M NAV†
Convert to a public ETF. Defer taxes indefinitely.
Once the pool crosses $500M, Rising Tide offers tax-optimised Section 351 conversions — exchanging your EFLF shares for shares in a publicly traded ETF without triggering a capital gains event at the time of conversion.

The result: liquid, exchange-traded shares you can sell on public markets, borrow against at prime rates, or hold inside a tax-deferred estate planning structure potentially indefinitely.
Liquid currency
Trades on public markets like any stock
Tax treatment
Capital gains deferred at conversion†
The Bottom Line
More upside. Less downside. Earlier liquidity.
For highly qualified early-stage founders, the EFLF delivers something no other financial product offers: the unique combination of increased expected return from the pool's power-law mathematics, meaningful downside protection against your startup failing, and three distinct paths to liquidity — all without surrendering voting rights, or triggering a tax event on day one.
The Liquidity Ladder

Unlocking value at every stage.

Stage 1 $200M Pool NAV
Borrow against your EFLF stake
A debt facility opens, allowing you to borrow against the value of your pooled shares at institutional rates. No need to sell. No tax event. Works even if your own startup has failed.
Without EFLF
Borrowing against private company stock is typically impossible until your startup reaches a multi-billion-dollar valuation — if ever.
Stage 2 $300M Pool NAV
Sell via Rising Tide's secondary fund
Rising Tide's in-house Secondaries fund will purchase your EFLF stake at a 10–15% discount — a fraction of the 30–50% you'd face on a solo secondary. Available even if your startup has since failed.
Without EFLF
Solo secondary sales require a willing buyer, often a 30–50% haircut, and only become realistic once your startup is already worth hundreds of millions.
Stage 3 $500M Pool NAV
Convert to a publicly traded ETF
Tax-optimised Section 351 conversions into publicly traded ETF shares. Trade on public markets, borrow at prime rates, or hold inside estate planning structures — with capital gains deferred at the point of conversion.†
Without EFLF
A traditional IPO or acquisition is your only path to public-market liquidity — and you're waiting 10+ years on average with no certainty it ever comes.
Eligibility
Y Combinator 2025 & 2026 batch founders
Pool Size
100–300 startups (minimum 100 to close)
Stage
Founding / Pre-Seed — earliest possible entry
Manager
Rising Tide Management LLC
Who It's For

Is the EFLF right for you?

The EFLF is currently open exclusively to a select group of seed-stage founders — the stage at which the power-law mathematics work most powerfully. Find your path below.

Apply Now
YC 2025 & 2026 Founders
The EFLF is currently open exclusively to founders in Y Combinator's 2025 and 2026 cohorts. If you're in a current or recent YC batch, spaces are limited — the fund closes once the pool is full.
Apply Here
Express Interest
Other Early-Stage Founders
Not a 2025 or 2026 YC founder? We're actively designing future EFLF products for other exceptional early-stage founders. Register your interest and we'll reach out as future cohorts open.
Register Interest
We Built Something For You
Series C+ Founders, Executives & Early Employees
The EFLF is designed exclusively for seed-stage founders — at Series C and beyond, the return distribution has normalised and the seed-stage pooling math no longer applies in the same way. But concentrated late-stage stock is its own acute problem, and it deserves its own solution.

The Exceptional Company Liquidity Fund (ECLF) is built specifically for your situation. It lets Series C+ founders, executives, and early employees diversify a slice of their concentrated position into a pool of 50–75 elite US private companies — collapsing variance, reducing the chance of loss, and opening three paths to early liquidity.
Explore the ECLF

1 Seed-stage startup failure rate based on AngelList early-stage venture data (Othman, AngelList, 2019) and corroborating research from CB Insights and Crunchbase. Failure definitions and sample populations vary across studies; the cited figure represents the proportion of seed-stage companies that do not return invested capital to investors.

2 Based on analysis of VC-backed technology company exit timelines. Median time from founding to IPO for companies achieving a public exit has ranged from 10 to 14+ years across vintage years 2000–2020 (PitchBook; NVCA Yearbook). The majority of funded companies never reach a liquidity event of any kind.

3 Secondary market discount range based on observable transaction data for illiquid private company shares. Actual discounts vary materially by company stage, market conditions, seller urgency, and buyer availability. A secondary transaction may not be achievable at any price in all circumstances.

4 Modelled probability of loss based on Monte Carlo simulation of 5,000 fund paths. Winner returns are drawn from a lognormal distribution (μ=0.59, σ=1.35 at the default tail exponent α=2.42, σ scaling with α as σ = 1.35 × (2.42 / α)) calibrated to AngelList early-stage venture data (Othman, 2019; Koh & Othman, 2020), with a 65% startup failure rate and a 10,000× cap on individual company returns. See the EFLF Simulator for full methodology and slider controls. This figure is a model output derived from historical data and does not constitute a guarantee of performance or return of capital. Actual results will differ.

5 Estimated discount range for secondary sales of EFLF pool stakes. Actual pricing is subject to pool NAV, market conditions, and counterparty availability at the time of any transaction. See footnote † for NAV milestone contingencies.

† NAV milestones are targets, not guarantees, and are subject to market conditions and fund performance. The three additional liquidity paths (institutional debt access, secondary sale, and ETF conversion) may not be available to all pools or all investors, and are contingent on the fund reaching the stated NAV thresholds. Pricing for each liquidity path will be finalised at the time of the relevant transaction and is market-dependent. Nothing on this page constitutes a commitment, offer, or guarantee of liquidity.