Fund/Build/Scale What Your CEO Won't Tell You About Your Stock Options
When you accepted the offer, maybe you imagined being in the group photo when your boss rang the bell at NASDAQ.
But five years later, your company just raised its Series C, and an IPO isn’t on the horizon. Meanwhile, you need liquidity — whether it’s for a down payment on a house, starting a family, or another major life event.
The stock options you’ve earned are fully vested, but they’re just sitting there. So how do you turn them into cash?
If your company allows it, you can sell your shares to an accredited investor, assuming you can find a buyer who’ll meet your price.
That’s where the secondary market comes in. I spoke with Phil Haslett, founder and Chief Strategy Officer at EquityZen, a platform that helps startup employees sell a portion of their equity to investors looking to get in on high-growth companies before they go public.
We took a deep dive into how the secondary market works, its risks and rewards, and how aspiring founders can even use it to bootstrap their own startups.
Disclaimer: This interview is for informational purposes only. Nothing Phil says should be interpreted as financial advice.
RUNTIME 41:54 EPISODE BREAKDOWN
(0:00) I used Descript to create an elaborate cold open for this episode, please listen.
(3:19) The specific pain point that led Phil and Atish to start EquityZen.
(5:11) “ I've kind of gone through maybe two or three evolutions of the IPO markets since EquityZen started.”
(7:57) All things being equal, early-stage tech workers take on more risk than founders or investors.
(9:12) Few workers are well-informed about the secondary market, “but it’s not their fault.”
(11:38) “ At some point, employees start to decide that maybe where they want to work — or maybe where they want to keep working — might be informed a bit by what they can or can't do with their equity.”
(13:06) Should we keep the traditional four-year vesting schedule, or scrap it for something new?
(14:14) Typical reasons why sellers turn to the secondary market.
(16:25) EquityZen’s typical selling size and average investment size, as of November 2024.
(18:52) ” You're probably not gonna get a billion-dollar valuation for your shares purely based on structure alone.”
(20:45) Keep close track of your equity, especially if you think you’re going to be laid off.
(22:20) Consult a financial services professional before you start the process.
(24:16) “ The first steps are kind of just also learning if you can sell your shares.”
(27:04) “ The company that you held shares in, if it went to zero: would you regret that you didn't sell?”
(30:10) A framework for figuring out whether the secondary market is worth the time and trouble.
(33:25) Offer your employees liquidity without jeopardizing morale or financial stability.
(36:27) Phil’s founder pitch: “ We're gonna support you all along the way. We can help you with liquidity in the future.”
(39:16) Tips for approaching your CEO to ask about liquidity options.
LINKS- Phil Haslett, co-founder/Chief Strategy Officer
- Atish Davda, co-founder/CEO
- EquityZen
- Music: She Was In Hawaii (Lap Steel)
- SFX: Bar Background Ambience 01
- SFX: Ocean Waves Crashing Ambience
SUBSCRIBE
🎧 Apple Podcasts: https://podcasts.apple.com/us/podcast/fund-build-scale/id1719488387
🎧 Spotify: https://open.spotify.com/show/0EbC8PTUSfpZ4USPC9ErnN
📥 LinkedIn:https://www.linkedin.com/newsletters/7249143254363856897/
📓Substack: https://fundbuildscale.substack.com
📸 Instagram: https://www.instagram.com/fundbuildscale/
Thanks for listening!
– Walter.