The Meb Faber Show - Better Investing Turning Expiring Options Into Venture Exposure [Vested’s Dave Thornton] | #597
Sep 12, 2025
Dave Thornton, Co-founder and Chief Customer Officer of Vested, dives into the intricacies of startup stock options, revealing that a staggering $600 billion in equity goes unclaimed. He explains how Vested empowers employees by offering funding to exercise expiring options. Thornton introduces 'Vestimate', a groundbreaking tool to track equity value and highlights trends in IPOs and venture capital exposure. Plus, he discusses the vital shift towards corporate partnerships to enhance stock option liquidity, making it easier for employees to benefit from their equity.
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Fund Option Exercises To Preserve Upside
- Use outside capital to exercise expiring options when you lack cash to avoid abandonment.
- Sell the minimum shares needed so you retain maximal upside after exercising options.
Cash Constraints Drive Massive Abandonment
- Many startup employees lack cash to exercise options after underpaid cash compensation, causing high abandonment.
- Concentration risk makes using other people's money sensible unless you have large discretionary cash.
Board FMV Is The Practical Pricing Anchor
- The board-approved fair market value (FMV) is the standard common-stock price and embeds lack-of-marketability discounts.
- Buying at FMV is acceptable for long-hold portfolios since liquidity discounts matter less for patient investors.