[deleted]
Secondary shops flooded with unicorn sellers
11–20 of 158 posts
Re: Secondary shops flooded with unicorn sellers
#12> Secondary sales totaled $47 billion in 2014, up 80 percent from the previous year, according to investment bank Evercore.
Still a relatively small volume of sales we are talking about here. Does anyone have any information on the structure of the secondary market - big players, regulation, etc. The article was light on details.
Re: Secondary shops flooded with unicorn sellers
#13Semi related question: One has to be an accredited (i.e. wealthy) investor to invest in startups, but this does not apply to employees exercising options. Does that mean that employees who do not meet the wealth requirements to be accredited are only ever able to sell ownership, and only to accredited investors?
If the company is private then employees exercising options generally (always?) have clauses that restrict them from selling that stock whether they are accredited investors or not. Not a lawyer, but I think there may be two reasons: 1) prevent covert takeover from the original founders 2) prevent a general market for private companies (before IPO). IPO involves a lot of regulatory overhead to confirm full disclosure…
I too assumed this limitation was widespread. But if unicorns are high-valued private companies, and there is a secondary market for their stock, then surely some holders are not restricted this way.
Anyone know why / what triggers that? When is it typical for stock granted to employees to actually be resellable?
Re: Secondary shops flooded with unicorn sellers
#14Semi related question: One has to be an accredited (i.e. wealthy) investor to invest in startups, but this does not apply to employees exercising options. Does that mean that employees who do not meet the wealth requirements to be accredited are only ever able to sell ownership, and only to accredited investors?
Side note: You're considered an "accredited investor" if you made $200k/year in each of the prior two years and expect a similar income in the current year. https://www.investor.gov/news-alerts/investor-bulletins/inve...
So, not necessarily just "wealthy" individuals.
Re: Secondary shops flooded with unicorn sellers
#15Has any HNer participated in such a secondary sale? I think it could be informative to describe the experience, whom you dealt with, how a price was agreed upon, how your company discussed secondary sales, etc.
I have participated as a seller.
I offered some of my exercised options for sale on SharesPost [1]. The SharesPost representative contacted me; she said that she had a potential buyer interested, but the bid was slightly lower than my initial ask and the volume they wanted to buy was a little lower than what I had offered to sell initially. We agreed on the deal.
I filled out some paperwork and sent proof that I was a legitimate seller. SharesPost representative got in touch with my employer. My employer had the right to first refusal which they waived. The process took few weeks with escrow etc, but was smooth.
SharesPost charged me a %ge fee. I also had to pay for the escrow service.
Re: Secondary shops flooded with unicorn sellers
#16Semi related question: One has to be an accredited (i.e. wealthy) investor to invest in startups, but this does not apply to employees exercising options. Does that mean that employees who do not meet the wealth requirements to be accredited are only ever able to sell ownership, and only to accredited investors?
Side note: You're considered an "accredited investor" if you made $200k/year in each of the prior two years and expect a similar income in the current year. https://www.investor.gov/news-alerts/investor-bulletins/inve... So, not necessarily just "wealthy" individuals.
That's pretty wealthy by most standards, isn't it?
Re: Secondary shops flooded with unicorn sellers
#17Semi related question: One has to be an accredited (i.e. wealthy) investor to invest in startups, but this does not apply to employees exercising options. Does that mean that employees who do not meet the wealth requirements to be accredited are only ever able to sell ownership, and only to accredited investors?
Side note: You're considered an "accredited investor" if you made $200k/year in each of the prior two years and expect a similar income in the current year. https://www.investor.gov/news-alerts/investor-bulletins/inve... So, not necessarily just "wealthy" individuals.
So... "incomey" individuals then?
Re: Secondary shops flooded with unicorn sellers
#18Earlier quoted context omitted.
If the company is private then employees exercising options generally (always?) have clauses that restrict them from selling that stock whether they are accredited investors or not. Not a lawyer, but I think there may be two reasons: 1) prevent covert takeover from the original founders 2) prevent a general market for private companies (before IPO). IPO involves a lot of regulatory overhead to confirm full disclosure…
I too assumed this limitation was widespread. But if unicorns are high-valued private companies, and there is a secondary market for their stock, then surely some holders are not restricted this way. Anyone know why / what triggers that? When is it typical for stock granted to employees to actually be resellable?
Depends on the terms under which the employee is issued stock. From a 2014 article[1]:
Two months ago, an early Uber employee thought that he had found a buyer for
his vested stock, at $200 per share. But when his agent tried to seal the deal,
Uber refused to sign off on the transfer. Instead, it offered to buy back the
shares for around $135 a piece, which is within the same price range that Google
Ventures and TPG Capital had paid to invest in Uber the previous July. Take it or
hold it.
The employee also learned that Uber had amended its bylaws more than a year
earlier, in order to restrict unapproved secondary sales. It was unclear if the
bylaw change actually applied to shareholders who had not been party to the vote —
lawyers seem to disagree on this point of Delaware law — but Uber threatened
litigation if he tried to proceed. So he held. The financial and reputational
hassles of a lawsuit would have just been too much, even if he had won.
Re: Secondary shops flooded with unicorn sellers
#19Semi related question: One has to be an accredited (i.e. wealthy) investor to invest in startups, but this does not apply to employees exercising options. Does that mean that employees who do not meet the wealth requirements to be accredited are only ever able to sell ownership, and only to accredited investors?
Side note: You're considered an "accredited investor" if you made $200k/year in each of the prior two years and expect a similar income in the current year. https://www.investor.gov/news-alerts/investor-bulletins/inve... So, not necessarily just "wealthy" individuals.
Heh, I'm not 'poor' but how in the hell is 199k/year not 'wealthy'?
Re: Secondary shops flooded with unicorn sellers
#20Earlier quoted context omitted.
Side note: You're considered an "accredited investor" if you made $200k/year in each of the prior two years and expect a similar income in the current year. https://www.investor.gov/news-alerts/investor-bulletins/inve... So, not necessarily just "wealthy" individuals.
Heh, I'm not 'poor' but how in the hell is 199k/year not 'wealthy'?
You live in downtown Manhattan.