Barry understood that the stock options he was offered as part of his compensation package at Confluent could eventually turn into something very valuable. But what he didn’t know was that the upfront cost to exercise those options could be quite expensive. Much of the discussion around the office was “‘why would you want to exercise your options? We’re not going to IPO yet. Wait until we IPO then exercise them’” said Barry.
When he decided to leave the company, he didn’t want to lose his stock options. But he only had 90 days to exercise them or he’d lose them. That’s when he realized the cost was significant, and he wasn’t sure he wanted to risk his own money because he wasn’t sure when, or if, Confluent would go public.
He turned to equity financing and Secfi. “I can’t speak highly enough. It was just so transparent,” he said. “And there was so much information. I didn't know what I didn't know.” For him, it really came down to how his Equity Strategist answered all his questions and walked him through the entire process. “The biggest thing was the people that I had talked to,” he said.
Barry knew his stock options were worth it but wasn’t sure he could afford it in 90 days
“I didn’t fully understand the tax implications,” he said. “That was one of the big things that was kind of an eye-opener,” he added because it “was not just a matter of simply putting out some cash to buy the options. There’s also a very large tax liability.”
That’s when he realized his cost to exercise was going to be pretty steep. And, while he was confident in Confluent’s business and their potential to IPO, he wasn’t sure he was willing to risk his personal finances to own his options.
“That was the big gamble,” he said. “I had the funds that I could have used for the exercise. But it was that whole tax liability at the end of the year.” And, because he wasn’t certain if or when Confluent would go public, he would still need to pay the cost to exercise along with any taxes upfront without knowing when he could see any value from his stock.
He turned to equity financing to help with the cost but to also minimize his risk
He had heard about Secfi from a co-worker that had already had a good experience financing his options. But he still wanted to do some research before making a decision. He reached out to Secfi but he also spoke to others that could provide equity financing. And he had a lot of questions about how it worked. He had concerns about what happens if Confluent didn’t IPO or, if they did, and the stock didn’t do as well as he was hoping. “Secfi was very upfront,” he said. “One of the things I really appreciated was the fact that they talked through that whole scenario.”
The part he valued most, and the reason he ultimately decided to work with Secfi, was that everything was explained clearly, and all of his questions were answered. “It was very much a consultative thing,” he said. “Just making sure I understood the whole process,” he said. Plus there was “absolutely no pressure” to make a decision, he added. He mentioned he was speaking with other equity financing companies and Secfi said he should do his due diligence and choose the best solution for himself. “I'd actually talked to a couple of different companies that do handle very much the same kind of transactions,” he said. “And Secfi was the most attractive.”
To his surprise and delight, Confluent did IPO shortly after he worked with Secfi. And the process of settling — paying back his financing to Secfi — was a continuation of the positive experience he had. Now he owns stock in a public company with the potential for building a new financial future. “Certainly, I have not regretted that decision,” he said.
This Secfi client was not compensated for telling their story.