Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How I sold my stock options

segah.me

Post reply on HN
Print view View original

21–30 of 52 posts

Re: How I sold my stock options

#21

Post by toomuchtodo »

jeremymcanally wrote: post #18
gaadd33 wrote: post #14

Earlier quoted context omitted.

Are they actually non transferable or are they required to give the right of first refusal to the company? If they are non transferable at all, what limitations are there? Can you transfer them in bankruptcy or divorce?

Probate transactions allow for a transfer typically (and they may allow for a very few specific other cases such as covering tax on your options by offering a buyback for some portion of them), but otherwise, there is absolutely no transfer allowed unless the company's board allows it.

One time transfer into a family trust is usually permitted as well.

Re: How I sold my stock options

#22

Post by somberi »

dotBen wrote: post #17

Couple of thoughts as a founder and investor: 1) The company is disincentivized to help you sell your stock/options because it will create a new valuation of common stock. Companies use the lure of a low 409a to attract employees, especially savvy executives, with equity packages. Doing anything to set a higher future strike price is not in their interest. 2) Your NDA almost certainly prohibits you from communicating…

Voting this up. I came here to opine something similar. My POV is similar to that of the parent (Founder and Investor).

Re: How I sold my stock options

#23

Post by sulam »

hatred wrote: post #11
thisisit wrote: post #5

Maybe I missed it but there doesn't seem to be much info on the selling price. Did it sell on the valuation implied by the last funding round or was it lower to "solve the risk problem for the investors?".

Usually the common stocks goes at a discount of around close to 15-20percent when compared to preferred for good deals. If the company is not doing well, the discount would be higher proportionally.

My experience is that common can be one-third of preferred. I'm sure that spread varies, but it's wider than you're describing.

Re: How I sold my stock options

#24

Post by aassddffasdf »

verelo wrote: post #4
compsciphd wrote: post #2

don't many option plans say that shares are non transferable until a liquidity event unless company decides they should be transferable (ala what uber did recently).

This was my first reaction. I don’t see why a company would allow this, it could easily put them in a tight spot if they were trying to raise capital at the same time.

Perhaps a company would allow it because the labor market coordinated amongst itself and demanded it? But alas you're correct capital can fuck labor over and over again with no recourse in the current climate.

Re: How I sold my stock options

#25

Post by acjohnson55 »

sulam wrote: post #23
hatred wrote: post #11

Earlier quoted context omitted.

Usually the common stocks goes at a discount of around close to 15-20percent when compared to preferred for good deals. If the company is not doing well, the discount would be higher proportionally.

My experience is that common can be one-third of preferred. I'm sure that spread varies, but it's wider than you're describing.

Out of pure curiosity, what perspective would give one this experience? I guessing working at a VC fund?

Re: How I sold my stock options

#26

Post by toomuchtodo »

BigJono wrote: post #8
toomuchtodo wrote: post #6

Earlier quoted context omitted.

It is possible to use a specialized finance vehicle in order to create a synthetic liquidity event for non-transferable exercised options; it is, in effect, a non-recourse promissory note.

Just when I thought I was getting the hang of how equity works... I didn't understand a word of that (other than non-transferable exercised options).

Apologies, I overcomplicated it.

Someone lends you money to exercise your options, you pay them back (at IPO or acquisition) as well as additional compensation for their risk of your shares being worthless.

Re: How I sold my stock options

#27

Post by wtvanhest »

dotBen wrote: post #17

Couple of thoughts as a founder and investor: 1) The company is disincentivized to help you sell your stock/options because it will create a new valuation of common stock. Companies use the lure of a low 409a to attract employees, especially savvy executives, with equity packages. Doing anything to set a higher future strike price is not in their interest. 2) Your NDA almost certainly prohibits you from communicating…

This is why google/facebook/snapchat/airbnb etc. take the best talent. There is an opportunity for early stage companies to create equity packages that attract great people. It is really a shame.

Re: How I sold my stock options

#28

Post by sulam »

acjohnson55 wrote: post #25
sulam wrote: post #23

Earlier quoted context omitted.

My experience is that common can be one-third of preferred. I'm sure that spread varies, but it's wider than you're describing.

Out of pure curiosity, what perspective would give one this experience? I guessing working at a VC fund?

Founding and working for multiple startups, including some that were fairly successful and therefore attracted multiple rounds of funding. I can't claim to have as much data as a VC would have, but I certainly have seen wider spreads personally, so I can attest that they exist.

Re: How I sold my stock options

#30

Post by lasgsf »

toomuchtodo wrote: post #26
BigJono wrote: post #8

Earlier quoted context omitted.

Just when I thought I was getting the hang of how equity works... I didn't understand a word of that (other than non-transferable exercised options).

Apologies, I overcomplicated it. Someone lends you money to exercise your options, you pay them back (at IPO or acquisition) as well as additional compensation for their risk of your shares being worthless.

Yup that is what equidate does. Basically a forward contract on the underlying shares. I have done this with some AirBnB shares.
Post reply on HN