The article discusses how venture capital investors use secondary markets to exit investments early or obtain liquidity. Their behavior affects deal terms with entrepreneurs. The study shows that in a world with financially constrained investors, two types of contracts are possible, each with drawbacks. One contract leads to keeping bad projects, while the other may result in prematurely selling good ventures. Entrepreneurs should consider these factors when making decisions. The model helps explain why investments flow into secondary markets and makes predictions for future research.