So what happens if the company goes public?
Equidate's new stock market for private tech offers in-depth data on startups
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Re: Equidate's new stock market for private tech offers in-depth data on startups
#32Earlier quoted context omitted.
That's for transferring, the sale only. And the lack of transparency means we also don't know if "most" is really like that, no matter how standard your CEO said it was. The three startups you worked for probably share some venture capital firm or related board member that copy and pasted the equity contract But it didn't mean, necessarily, that condition is so prevalent or that much of a roadblock
Dude. Bro. I advise other people on their stock grants, and see this all the time. Thanks for assuming I'm just a schlob.
Hi, company lawyer here. Sorry if that sounded dismissive. You're completely right that there's a right of first refusal built somewhere into most stock issuances to team members. They vary in who holds the right, the range of transactions that trigger the right, exceptions to the right, and how it operates. Accordingly, we look at the paperwork for each company and each shareholder in order to structure a transaction that works, if possible.
Re: Equidate's new stock market for private tech offers in-depth data on startups
#33How does a market that lets people buy and sell shares without the company going public not get immediately slapped around by the SEC? This all just feels wrong to me. As an employee selling shares how can I be sure I'm not getting screwed over by anyone? The entire thing just seems shady.
As the company's in-house lawyer, I see that people who have a lot of stock have generally hired a wealth manager, financial advisor, or personal lawyer who advises them on transactions, or learn through colleagues who have done so. Some lawyers specialize in employee equity, or private transactions more generally. Shares of stock can be bought and sold like other financial assets, subject to any regulations and contract obligations that apply. That's a definitional attribute of stock and other securities. Public markets are a layer on top of that, not something fundamentally different. Employee shareholders who are not directors, officers, or 10% owners generally fall under a 4(a)(1) exemption from registration. There are a bunch of online resources on the topic, for example http://securities-law-blog.com/2015/06/23/section-4a1-4a1%C2... (no connection and not an endorsement, the site just looks helpful).
Re: Equidate's new stock market for private tech offers in-depth data on startups
#34"a market for trading shares of private companies"
So... the stock market? How can this possibly be legal?