Questions and answers
Not exactly. We provide non-recourse financing. The major difference is that your stock options are the only collateral, so none of your personal assets are at risk and you don’t need to pay it back unless your company exits. Learn more about non-recourse financing here.
While we hope this isn’t the case, it does happen. If it does, you don’t have to pay anything back. Seriously.
Secfi does not take control or ownership of the shares at any point in the agreement. You will remain the sole owner and beneficiary of the shares at all times.
You only need to pay back what the shares are worth at the time of settlement. If, at that time, the value of the shares is less than the amount we advanced, you only pay back the lesser value of the shares.
There is interest on the advanced amount and an equity fee, which is based on the value of the shares at settlement. Rates are a reflection of the risk involved in the transaction. The largest factor in the rates is the company from which the shares are issued (the business model, competitive landscape, exit projections, etc.). We thoroughly underwrite every company before offering financing. Another large factor is the specific details of each individual transaction--every person could have different rates depending on their strike price(s), tax need, etc. They are not negotiable.
Depending on processes we already have in place with your company, we can typically close a transaction within 5 business days, but as fast as 3 days.
Yes, we’ve worked with many clients on additional transactions. Typically, after more options have vested (6 months, 1 year, etc.) we can provide another round of financing. We’ll work with you at that point to determine the best path forward.
When you settle with Secfi, we’ll calculate the total amount owed, including the amount in cash we forwarded to you, the cash advance rate, and equity fee. Depending on the terms of your financing contract, you may settle with cash or by transferring shares of your stock.
Settlement will take place 10 days after your shares become unrestricted and/or 10 days after you’re able to qualify for long-term capital gains. If your company goes public through an IPO and there’s a 6-month lockup period, for example, settlement would be 10 days after the lockup period ends.
To establish the dollar value of the equity fee portion of your financing transaction, we use a calculation determined by the average value of the stock's share price at settlement.
We won’t expect any kind of settlement until you can get the value out of your shares. If that takes 1 year, great. 3 years? No problem. You’ll never be required to settle before you can access the value of your shares.
We are constantly updating the companies we have approved for non-recourse financing. We will contact you if and when your company is approved in the future. Many of our companies have been approved because of the due diligence of our clients. If you believe your company was rejected in error or have information that could help us update our decision, contact us.
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