INSUBCONTINENT EXCLUSIVE:
But what happens when these employees get laid off or have to leave before an exit?When Wouter Witvoet left a startup that he had joined as
employee #4, he felt relatively prepared, having set aside $50,000 to exercise his available stock options, only to be informed by HR that
exercise stock options and wait until an IPO or exit to make payments.Looking to leverage paper wealth is hardly a new trend, but more
institutional investors are eyeing the non-traditional opportunity as high-growth startups get harder to access
For some of the hedge funds and private equity funds playing around in this space, these deals represents a back door into the paydays of
mature IPO-bound startups at a discount.There are a number of players with hundreds of millions at play
The Bay Area ESO Fund has been providing this financing to startup employees since its founding in 2012.Secfi, which has raised $7 million
in venture funding from investors including Rucker Park Capital, Social Leverage and the Weekend Fund, had previously been acting as a
down a $550 million debt facility.Taking out run-of-the-mill loans to exercise options with the assumption that a great exit inevitably
awaits your startup is an awful call
These forward purchase agreements are backed by the options themselves so the recourse is limited to the options in question
a good chunk of your upside
If your startup endures a WeWork-like fiasco, no one is coming after your car.With more late-stage startups pumping the brakes on spending
Many end up finding themselves going down Quora rabbit holes, browsing for information that is rarely one-size-fits-all
Educating on an individual basis has its merits, but most of these options financing firms are also trying to get HR departments at
companies to do a bit of the marketing for them through partnerships with the startups themselves.As more money gets directed from these
startup millionaires a platform that extends beyond the pathway to options upside.
