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How I sold my stock options

segah.me

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Re: How I sold my stock options

#31

Post by acjohnson55 »

sulam wrote: post #28
acjohnson55 wrote: post #25

Earlier quoted context omitted.

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.

Got it. Thanks for sharing!

I wish there were a better clearing house for this sort of collective experience. I guess HN serves that purpose, to an extent, but it's hardly organized.

Re: How I sold my stock options

#32

Post by lasgsf »

purplezooey wrote: post #9

What about those places like EquityZen, anybody done that?

I have done two transactions with them. One was a SPV direct transfer on the companies cap table which was pretty straight forward. The other one was a forward contract which was a little more unease but the opp was worth it.

Re: How I sold my stock options

#33

Post by acjohnson55 »

purplezooey wrote: post #9

What about those places like EquityZen, anybody done that?

Having just read about Equity Zen following your comment, I'd also be interested to know what people think about them. Their FAQ lays out a pretty compelling case for their value prop to all parties, so I'm curious if there are any strong arguments against them, especially from a company's perspective.

Re: How I sold my stock options

#35

Post by [deleted] »

buzzdenver wrote: post #13

Were you able to sell your options, or exercise them and sell those shares ? If the latter, can you give us a hint how the price compared to the last round your company raised ? What did you mean by "changing the attractiveness of the shares" ?

[deleted]

Re: How I sold my stock options

#37

Post by JumpCrisscross »

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.

> Someone lends you money to exercise your options, you pay them back (at IPO or acquisition)

There is a lot of uncertainty about whether these loan-and-pretend or forward structures violate the spirit of one’s stock option contract, which can and has resulted in forfeiture, and if it involves creating an off-exchange securities swap, illegal since Dodd Frank for non-qualified participants. It was receiving regulatory attention before cryptos distracted everyone. (One firm even got jammed by the SEC early on for structuring illegal swaps.)

Re: How I sold my stock options

#38

Post by segah »

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…

OP here. This is straight from the theory book. But from my experience there is a lot more gray area

Re: How I sold my stock options

#39

Post by lmeyerov »

somberi wrote: post #22
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).

Yep, strong +1 to the "sell at next round" and find a way to make it worth the while of the founders. They'll dictate what happens and it is, at best, a distraction for them, and at worst, a problem.

Ex: When a round is already oversubscribed yet they still want to do someone a favor, such as for a stronger advisory relationship, they may be willing to sell your common as part of the round on your behalf.

Re: How I sold my stock options

#40

Post by mrgordon »

lasgsf wrote: post #30
toomuchtodo wrote: post #26

Earlier quoted context omitted.

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.

How was the experience overall?
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