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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 – as in most cases, you have 90 days before your options expire.
But don’t worry! We’ve got you covered. In this post, we’ll walk you through the entire process of exercising your employee stock options with funding from EquityBee. 

But first…

Can EquityBee Help Me Exercise My Employee Stock Options?

If you are or were an employee who was granted equity compensation and worked for a US company that raised $50 million or more, then EquityBee is the answer to your internet search. Yay, you found us!
With an Investor Community of over 10,000 private investors and funds, we at EquityBee will do everything in our power to help you get the capital you need to fund your employee stock options.

How Do I Get Started?

To begin the funding process, simply sign up through our website or schedule an introduction call. Next, you’ll be connected with an assigned Equity Success Manager to determine whether you qualify.
Your Equity Success Manager will function as your guide throughout this entire process with EquityBee.
No worries, you will not have to pay a single feeregistering and receiving a personalized funding offer are both commitment free and free of charge!

exercie your stock options via EquityBee - meeting scheduled
Meeting scheduled step after onboarding signup.

What Information/Documents Am I Required to Share?

When you qualify, you’ll be prompted to provide all the relevant documentation concerning your employee stock options. The list of documentation consists of a grant letter or option agreement, the company’s latest fair market value (FMV), and so on. If your former workplace uses Carta, we recommend connecting it to EquityBee to seamlessly import your information and save time.  

I Shared My Documentation. What’s Next? 

You’ve completed the preliminary tasks, now what awaits is receiving your free personalized offer.
Your personalized offer is contingent on a variety of factors, such as your state of residence when your options were vested, exercise cost size, 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 stock options among EquityBee Investor Community.
By having over 10,000 investors compete for providing your funding, we are able to aim to provide you the best deal terms possible.

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 your taxes)
  • The terms of the amount you’ll need to return to the investor, the share incentive percentage (how the profits will be split between you and the investor) and the interest – in case of a liquidity event.

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 (or as we often refer to it, your PFC).
You will also be asked to provide your spouse’s consent, in case you have a spouse or a domestic partner.  This step is obligatory – we won’t be able to proceed and find your funding before you sign. Signing the PFC means you’re agreeing to the deal terms detailed in your offer and is legally binding.

Once your PFC is signed and approved, we perform a standard ‘soft’ background check (which doesn’t affect your credit score). The next exciting step?
Your funding (i.e. offer) will go live as an anonymous investment opportunity to our community of over 10,000 investors. These investors will then choose if they would like to participate in providing funding.

Cool! Now, How Do I Get My Employee Stock Options Funded? 

First, it’s good to know that this “deal” is entirely anonymous, meaning your name or position within your company won’t be published anywhere. Investors will know which company the employee stock options are concerning so they can make an investment decision. For the thousands of investors in the EquityBee community, this may be an opportunity to indirectly invest in your former workplace at a past valuation.
Ideally, these investors will be competing to provide funding for your deal for that reason.

exercise your stock options via EquityBee - funding status dashboard
EquityBee’s dashboard showing progress on your funding.

I’ve Got Funding! What’s Next? 

In the event you receive funding, you can officially exercise your options by following these steps:

  1. Wire the funding to the company within 2 business days of receiving funds from EquityBee.
  2. If your employee stock options were NSOs – you will pay the taxes at the time of your exercise; If your options are ISOs – you can set aside the extra portion raised to pay your taxes when the time comes.  No worries, we will provide you with all the information detailing how to exercise and breakdown the tax amounts.
  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(s) from the company within 2 months.  Once received, please be sure to email us a copy for our records!
exercising your stock options via EquityBee becoming a shareholder
Share certificate step after exercising your stock options.

Note that there is a possible scenario in which you potentially do not receive funding or only receive partial funding. And that’s okay, this doesn’t mean that this is the end!
It simply means investors weren’t fully convinced to provide funding for this initial go around. This could be for a variety of reasons, we can discuss trying again with another split if the circumstances allow it.

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

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

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

Now comes the exciting part!  At the time of a liquidity event (for example, when the company goes through an M&A or goes public), the company will notify you. You will share the great news with your Equity Success Manager at EquityBee and provide them with the details. We will walk you through the entire process, prepare all the calculations and provide the steps for you to share the proceeds with your investors.
This will be according to the share incentive percentage that you negotiated in your personalized offer and PFC. 

And there you have it, yes it’s that easy! We at EquityBee seek to make this process as smooth and easy as possible!
Leaving you can focus on what matters
you know, asking Siri, Hey Siri, what should I do with all this money?! 

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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.

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