If her company would IPO at a value anywhere north of $4 billion, she'd make the highest amount of money going with Option A, then B, then C. Her company was last valued at $8 billion by investors.
She felt confident about a future IPO. But the exercise costs of $213k were too high for her to cover herself, so she went with Option B and used Secfi to fund the exercise costs.
Step by step:
If you need a sparring partner, happy to help out. Just hit me up for a quick chat ↘️
If you're considering Option B:
You'll basically get the above chart, but personalized. It models out your specific scenario and shows your benefits under options A, B and C.
We'll also invite you for a quick "we answer all your questions" call, where we can discuss anything. Feel free to ask about rates, stock options, taxes, ISOs vs NSOs, how IPOs work...
For a lot of companies (e.g. Coinbase, Procore, Gitlab, Segment) we already have rates because we've worked with employees before. If you're at one of those, the process is fast-tracked and you'll have the proposal in just a few days.
If you want to exercise your ISOs but are not totally comfortable covering the costs with your own savings, it's perfectly possible to exercise up to a certain amount at your own cost, then use exercise financing for the remainder only. That way the fees will be a bit lower, and you'll have the best of both worlds.
You can decide up to what amount you're comfortable putting in. Just let us know, and we'll include that scenario in the financing proposal.
1. If you take NSOs and don't exercise right now, but later decide you still want to exercise after all, it's probably more expensive
The tax bill from exercising will be higher for two reasons:
If you want to see the impact of ISOs vs NSOs as well as higher 409A valuations, use our free Stock Option Tax Calculator. If you add your stock options twice – once as NSOs, once as ISOs – you can toggle both and see the difference.
2. An extended deadline is great, but still no guarantee your company will in fact exit within that deadline
If it doesn't, you'll still lose your equity when the deadline expires. That's not a risk if you exercise your stock options instead. Good to consider especially in case of a 5-year extension.
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