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Ask HN: Has anyone sold their employee stock on the secondary market?

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Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#31

Post by throwbigdata »

blaaaaa99 wrote: post #17
bradly wrote: post #14

I'm also curious if anyone has purchased secondary market shares and what that experience is like.

Bought uber, airbnb and reddit in 2018 on equidate/forgeglobal. Structured as contracts for future stock from current employees that get transferred to you after the ipo (and usually 6 month lockup) are complete. I got 100% of the uber stock (about 1x return) about 99.8% of the airbnb (about 2.5x return) and depending on if/when reddit ipos (was looking good for 10x a few months back but unlikely now) it will be inte…

Why is Reddit unlikely?

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#32

Post by secondarymarket »

e10jc wrote: post #18

I sold once with Equityzen and once with a different company, I forget the name. Both times were great, but it took years from start to finish. They’ll help you through the process. The fees were levels below the taxes, not bad at all. If you are interested and your company is listed on secondary sites, why not list some shares and see if anything comes through.

I'll look into those!

My main concern is around requiring board approval. There isn't any formal policy for employees seeking liquidity, and I'm not sure the board will be receptive.

I mean, what incentive would they have to allow employees to sell their shares before an IPO/exit event?

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#33

Post by secondarymarket »

kippinitreal wrote: post #27

Yes, with SharesPost, equityzen and Forge. Company had a pretty standard policy so approval was straightforward but took a few months and required some legal opinions (costing $,$$$). In my case the deal was for the shares directly. Biggest lesson was really just that the fees really added up (near 10% if under $100k) and it’s a shame more companies don’t do more to broker these deals on employees behalf to get the b…

Ah, interesting that your company had a standard policy for this. I wish mine did as well.

Worried about getting (or even asking for) board approval - what incentive would they have to allow an employee to reduce their stake in the companies success prior to an IPO event?

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#34

Post by secondarymarket »

onphonenow wrote: post #5

I'm curious about this as well. Does your employer know that you sold or not?

To transfer the stock directly you will need approval from the company/board.

I'm curious if anyone has done it without by using a private contract between buyer/seller (google: forward contracts).

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#35

Post by blaaaaa99 »

throwbigdata wrote: post #31
blaaaaa99 wrote: post #17

Earlier quoted context omitted.

Bought uber, airbnb and reddit in 2018 on equidate/forgeglobal. Structured as contracts for future stock from current employees that get transferred to you after the ipo (and usually 6 month lockup) are complete. I got 100% of the uber stock (about 1x return) about 99.8% of the airbnb (about 2.5x return) and depending on if/when reddit ipos (was looking good for 10x a few months back but unlikely now) it will be inte…

Why is Reddit unlikely?

High beta growth stocks all pretty much nuked, ipo window closing etc

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#36

Post by blaaaaa99 »

teej wrote: post #23
boulos wrote: post #20

Earlier quoted context omitted.

> it will be interesting to see how much of the stock i get if it has gone up massively since initial purchase. You mean from the employees backing out somehow?

The employee got cash already. Not sure they can simply “back out” without major consequences.

I think its a somewhat unproven legal structure and i dont think it has been tested with really spectacularly performing stocks.

If you sold rights to your stock for a million 5 years ago and now it is worth 15 million and still in your possession, it would be tempting to sell it asap and move to brazil and let the lawyers come and find you.

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#37

Post by bb88 »

secondarymarket wrote: post #33
kippinitreal wrote: post #27

Yes, with SharesPost, equityzen and Forge. Company had a pretty standard policy so approval was straightforward but took a few months and required some legal opinions (costing $,$$$). In my case the deal was for the shares directly. Biggest lesson was really just that the fees really added up (near 10% if under $100k) and it’s a shame more companies don’t do more to broker these deals on employees behalf to get the b…

Ah, interesting that your company had a standard policy for this. I wish mine did as well. Worried about getting (or even asking for) board approval - what incentive would they have to allow an employee to reduce their stake in the companies success prior to an IPO event?

Owning shares in a pre-ipo company comes with it's own risks. And not wanting to be diluted from future investments is a valid reason to selling your shares.

It's possible for the company to dilute your shares turning them worthless, and then generates new shares. I'm sure there's lots of examples you can find of dilution, but that was what FB did to the former CFO as shown in the movie "The Social Network".

People keep talking about working for soulless companies when deciding to work for startups, but I can't think of a more soulless way to screw over your employees.

Re: Ask HN: Has anyone sold their employee stock on the secondary market?

#38

Post by janstice »

secondarymarket wrote: post #32
e10jc wrote: post #18

I sold once with Equityzen and once with a different company, I forget the name. Both times were great, but it took years from start to finish. They’ll help you through the process. The fees were levels below the taxes, not bad at all. If you are interested and your company is listed on secondary sites, why not list some shares and see if anything comes through.

I'll look into those! My main concern is around requiring board approval. There isn't any formal policy for employees seeking liquidity, and I'm not sure the board will be receptive. I mean, what incentive would they have to allow employees to sell their shares before an IPO/exit event?

The incentive is to keep the employee, who maybe wants a big box of money to buy a house, from going to work at a FAaaNnGg for a fat signing bonus.
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