Sign-up to get a financing estimate for your {{ company_name }} equity

{{ company_name }} is eligible for financing 

As an early stage employee at {{company_name}}, you hold exclusive access to private stock in a pre-IPO company. With our non-recourse financing, we’re able to offer you liquidity for your shares or option exercise while still retaining the shares in your name.

What is non-recourse financing and is this a good option for a {{company_name}} employee?

Non-recourse financing is a type of financing arrangement in which your repayment is tied to your {{company_name}} shares. This means that if {{company_name}} never goes through an exit or liquidity event, you are not required to pay back the amount. This makes non-recourse financing a valuable option to exercise your options or obtain liquidity for your shares without putting your personal assets at risk.

Several factors come into play when considering non-recourse financing:

The most critical factor in non-recourse financing is the value of your shares. The value and quality of {{company_name}} shares play a significant role in determining the terms of the financing.

Our investment team has performed thorough due diligence to assess {{company_name}} to determine the value and risk of the shares.

Non-recourse financing terms may vary depending on the risk or exit timeline for {{company_name}}. Secfi’s non-recourse financing structure typically includes a time based fee, similar to an interest rate, as well as a portion of the value of the equity if the company has a successful exit.

You are looking to obtain some liquidity or cash today for a purchase or just diversification purposes. The financing can be an appealing alternative to outright selling your shares as you retain the upside in the shares.

You are looking for a way to exercise your stock options due to a deadline or to save on taxes without putting your own cash at risk. You may want to get ahead of any potential increase in exercise tax costs and start the clock on long-term capital gains. There are a lot of potential tax savings if the company has a successful exit.

You want to minimize your risk. Diversification is generally always a good idea and putting your savings into one stock can be a risky endeavor. You only pay back the financing if your company goes through an exit, such as an IPO.

Secfi’s financing structure is company friendly and does not require a transfer of ownership of shares. The shares will remain in your name and there are no payments due until an exit event. Upon an exit event (IPO, acquisition, etc.), you would settle your contract by paying back the advance and fees. Secfi’s structure does not require you to deliver shares.

Why is there interest in financing my {{company_name}} shares?

As an employee of {{company_name}}, you hold exclusive access to a piece of the pie. If you’ve ever wanted to be a part of a members-only club, well congratulations, you made it. No big surprise here, but a lot of others want to work their way into that club as well.

The beauty of non-recourse financing transactions is that everyone involved has the same end goal: a strong exit event. The success of the collateral {{company_name}} shares is mutually beneficial. If {{company_name}} has a successful IPO and share price, both you and the financing provider benefit from the appreciation in share price.

What happens when {{company_name}} goes public, or what if they never do?

Until {{company_name}} has an exit event, your agreement remains outstanding. Some structures may differ, but with Secfi’s structure, you’re never required to pay back any portion of your contract until the shares are liquid and freely tradable. This provides you downside protection, which typically never exists in a private company stock. Only the shares used are backing the transaction so there’s no liability to you or your family's personal assets.

When there is an exit event, say {{company_name}} IPO, which we’re all aiming towards - it comes time to settle your contract. There’s three financial values that come into play to make up your maximum settlement amount:

 - similar to an interest rate that accrues on the account and paid back only upon exit

 - an agreed upon % of value of shares due after exit

At settlement, you pay the lesser of the value of your shares or the maximum settlement amount. Ie. If your shares are worth less than the amount owed, you deliver the shares and walk away. If they’re worth more, you deliver the settlement amount and your shares are unrestricted. At that point, you’re free to hold onto them for capital appreciation or to sell for some liquidity & diversification.

It’s also worth noting that there may be certain tax liabilities or benefits from a non-recourse financing. With Secfi’s structure, any fees may be taken as a capital loss on your tax return which means a benefit. On the flip side, you may have a capital gain if you do not pay back the financing amount. The non-recourse financing provider should provide more information on this, and we always recommend speaking to a tax advisor.

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{{ company_name }} is eligible for financing!

Unlock liquidity for your {{company_name}} shares, thanks to our non-recourse financing solutions.

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Sign-up to get an estimate for your {{ company_name }} equity

{{ company_name }} is eligible for financing and secondary sales

Getting proper information about what solutions are available for your equity can be very difficult. Companies do not often publish information or provide advice when it comes to your equity. This is usually for good reason as they can open themselves up to legal liability. As a startup ourselves, we know that can be frustrating for employees so we wrote a guide to provide what you need to know about solutions for your {{ company_name }} shares or stock options.

When it comes to generating cash for liquidity purposes or to exercise your options, there are generally two possible solutions for your shares. The first is selling your shares in a secondary transaction. The second is entering into a financing agreement using your shares as collateral.

Selling {{ company_name }}  shares in a secondary transaction

The most known way to generate cash from your shares is selling your shares today. Those who sell their shares may do so to generate cash for a large purchase such as for a home or to exercise their stock options. Some may sell to also diversify their holdings as your {{ company_name }} equity is likely a large percentage of your assets today.

When it comes to the private markets, your shares are not freely tradeable like the public markets. In order to sell your shares, you’ll need to work with a broker to find a buyer. Brokers come in many forms - some are platforms that allow you to connect with buyers, some are individuals who work directly with you, and some are large teams that work on your behalf.

Each broker will charge a fee that’s usually a percentage of the total transaction volume which is standard in this industry. You should choose a broker that you trust has your best interests in mind and also understands the landscape for your company. The best brokers know {{ company_name }} and the market intimately so they can negotiate the best price as well as execution on your behalf.

You’ll also need to navigate the company restrictions. Some companies allow shares to be traded with no restrictions. Some companies may impose restrictions and allow only certain transactions to go through. And some may outright block transactions. When it comes to {{company_name}}, there are some restrictions and the company may need to approve a sale. Your broker can help you evaluate whether you may be approved by the company or not.

Lastly, if you want to sell your shares, you’ll need to find a way to exercise them before you sell them. Some companies may allow what’s called a cashless transaction in which the sale proceeds are used to exercise, but the majority do not so you are on your own to exercise the options and pay any associated taxes.


If you want to learn more about selling your {{ company_name }} shares, please contact our Equity Strategy team for a consultation.

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We can help you sell your {{company_name}} shares

Financing or borrowing cash against your {{ company_name }} shares

An alternative to selling your shares is to enter into a financing agreement which is similar to borrowing money against your shares. Depending on your situation, financing to exercise your options or to generate liquidity may be an appealing alternative to outright selling the shares as you retain the upside associated. For purposes of this article, we’re going to focus on the non-recourse financing solution which means that your personal assets are not on the line if things do not go well with your {{ company_name }} stock.

There are a few non-recourse financing providers out there including Secfi. Each company’s offerings differ slightly, but generally speaking the mechanics are largely the same. You enter into a financing agreement which provides a cash advance today and you only pay back the cash advance and associated fees after your company gets acquired or goes public. If the company goes bankrupt and your shares are worth $0, you pay back $0.

The structure is designed to be company friendly and there is no transfer of ownership of the shares so there is no company approval required. For {{ company_name }}, Secfi offers non-recourse financing for liquidity purposes, option exercise, or a combination of both.

Employees and executives who are interested in getting some cash today, but retaining the upside in their shares may turn to a non-recourse financing solution. You will receive a cash advance today for a portion of the value of your shares. That cash can be used for discretionary spending such as buying a house or simply diversifying your investments.

When {{ company_name }} goes public or gets acquired, you’ll pay back the cash advance along with fees. You retain the ownership of your shares in the financing transaction so you also maintain the upside associated in the shares.

Similar to the financing for liquidity, {{ company_name }} employees who own unexercised stock options may turn to a non-recourse financing solution like Secfi’s for help exercising their options. Since {{ company_name }} has grown so quickly, you likely own highly appreciated stock options with a low strike price. The downside to this is that by exercising you’re likely going to generate a large tax bill. The tax bill may be just a bit too large for you to handle or it may simply just be too risky for you to use your own cash to exercise.

Since {{ company_name }} options are highly appreciated, there are also significant potential tax benefits to exercising today. First, if the company continues to grow, it likely means that it will get even more expensive to exercise due to taxes as {{ company_name }} approaches exit. Secondly, by exercising today, you can convert your appreciation to long-term capital gains which is the lowest possible tax rate you can pay. 

See below for a sample employee comparing exercising options today versus waiting until an exit. The calculations assume the following:

You have 25,000 ISOs with a $8.5 strike price

The exit happens 12 months after you exercise

Make it personal and get access to our full suite of equity planning tools.

Get your custom {{company_name}} exercise plan

As you can see, there is a lot of potential tax savings for {{ company_name }} employees. At Secfi, we look to try to create a win-win scenario as you’ll have significant tax savings by exercising today. Some of those savings will go to fees, but if all goes to plan, you’re going to have more money in your pocket than you would have if you didn’t exercise today. Of course, a lot of that is dependent on {{ company_name }} continuing to perform and getting to an exit.

Finally… the million dollar question you are probably thinking right now.

Should I finance or should I sell my {{company_name}} shares?

Unfortunately, there’s no one size that fits all answers here. There are pros and cons to both selling and financing, and you’ll need to ultimately decide which is best for you. While this decision can be difficult, you should rest easy knowing that you’re in an enviable position at {{ company_name }} in that you do have options! Furthermore, you don’t necessarily have to choose one or the other as a combination of both selling and financing is often the best answer for many.

You also don’t have to go at it alone. There’s lots of knowledgeable advisors out there including at Secfi that can walk you through all the pros and cons of each solution. We’d be more than happy to chat and discuss the solutions on the table for you.

Work with one of our financial advisors on an as-needed basis to get help with your company equity.

Get advice for your stock options and equity

Discover strategies for handling your {{ company_name }} equity with our guide on secondary sales and financing options.

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