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Funding Your Employee Stock Options With Equitybee

Funding Your Employee Stock Options With Equitybee

You weighed the pros and cons, looked at all the available options and then you did it – you decided to exercise your employee stock options and become a shareholder in the startup you helped build. Now, you may have a tight deadline to exercise your options – in most cases, you’ll only have around 90 days before your options expire.
But don’t worry! In this post, we’ll walk you through the entire process and explain how Equitybee can help you get the funding you need to exercise your options.

Can EquityBee Help Me Exercise My Employee Stock Options?

We sure will try! If you were granted stock options from a US company that raised $50 million or more, you can see if your company qualifies here!
With an investor network of over 20,000 accredited investors, we help request the capital you need to fund your employee stock options.

How Do I Get Started With Equitybee?

To begin the funding process, simply sign up through our website. If your company qualifies, you’ll be assigned a personal Equity Success Manager who will guide you throughout the entire process.
Best part? You won’t have to pay out of pocket — the registration process is free of charge! 

What Information Am I Required to Share?

You’ll be prompted to provide all the relevant documentation concerning your options, including a grant letter or option agreement and the company’s latest fair market value (FMV). We’ll also ask you to send us some personal information and run a background and credit check before moving forward. If your workplace uses Carta, you can seamlessly import all of your information by connecting it directly to Equitybee. 

I Shared My Documentation. What’s Next? 

Once your documents have been approved, we’ll start working with your Equity Success Manager to finalize your offer terms. Your terms are contingent on a variety of factors, such as your state of residence, exercise cost, commencement date, and vesting schedule. Other factors include the difference between the company’s current fair market value and your strike price, as well as the demand for the company’s options among Equitybee’s investor network. 

Here’s what you can expect to see in your offer:

  • The amount of funding Equitybee will seek to secure on your behalf (to cover the exercise costs as well as taxes)
  • The terms regarding the split in share percentage in the event of your company having a successful exit, including interest. 

What Am I Committing to When I Sign The Offer?

After reviewing the terms of your offer, you’ll be asked to review and sign your Private Financing Contract (PFC). You will also be asked to provide your spouse’s consent, if relevant.  Signing the PFC is obligatory, as signing these documents means you’re agreeing to the terms detailed in your offer. It is legally binding.

Once your PFC is signed and approved, Equitybee will perform both a background and credit check. Once your background and credit check has cleared, your offer will go live as an anonymous investment opportunity to our investor network.

How Do I Get My Employee Stock Options Funded? 

Please note that your offer is completely anonymous – your name and position within the company will not be published anywhere. Investors will know the company, but your personal information will remain hidden. Ideally, the allure of accessing your company at a past valuation will cause investors to compete to provide funding for your offer!

Your Equitybee employee portal before funding is secured

I’ve Got Funding! What’s Next? 

If you received funding, you can officially exercise your options using the funds by completing these steps:

  1. Wire the funding to the company within two business days of receiving funds.
  2. If your options were NSOs, you will pay the taxes at the time of your exercise. If your options were ISOs, you can set aside the extra portion raised to pay your taxes when the time comes. 
  3. Email us the screenshots from the company confirming you’ve exercised your options. 
  4. Congrats, you’re now a shareholder! You can expect to receive your share certificate from the company within two months. Once received, please be sure to email us a copy for our records!
Your Equitybee employee portal upon securing funding

Please note, it is possible that you receive either partial or no funding as our platform is based on investor demand. 

It simply means investors weren’t fully convinced in your company to provide funding at this time. This could occur for a variety of reasons and we encourage you to discuss your alternatives with your Equity Success Manager.

For reference: screenshot of PFCs detailing when EE needs to exercise

I Did it! I’ve Exercised My Stock Option, Now What?

You have your share certificates and you’re officially a shareholder. What’s next? 

Now comes the exciting part! If your company has an exit event, you’ll reach out to your Equity Success Manager and provide them with the details. We will walk you through the entire process, prepare all the calculations, and help you share the proceeds with your investors. This will be according to the percentage that you negotiated in your terms of your offer and PFC, as well as the initial investment amount and accrued interest. 

Yes it’s that easy! At Equitybee, we work hard to make this process as smooth and easy as possible! This lets you focus on your next professional adventure! 

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All information provided herein is for informational purposes only and should not be relied upon to make an investment decision and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. Readers are recommended to consult with a financial adviser, attorney, accountant, and any other professional that can help you understand and assess the risks associated with employee stock options. Equitybee executes private financing contracts (PFCs), which allow an investor a percentage claim to employee stock options upon a liquidation event, with no guarantee of such an event, and is subject to the terms of your company options agreement. Entering into a PFC could limit your profits; you should consult with your own professional advisers prior to entering into PFCs. PFCs are brokered by EquityBee Securities, LLC, member FINRA.

All information provided herein is for informational purposes only and should not be relied upon to make an investment decision and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. Readers are recommended to consult with a financial adviser, attorney, accountant, and any other professional that can help you understand and assess the risks associated with any investment opportunity. Private investments are highly illiquid and are not suitable for all investors. Funding is not guaranteed.

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