⏳ Procrastinating on your startup equity? You're not alone

I hope everyone had a good Thanksgiving. Vieje back here again after a short break from the newsletter. I took the last few months off from writing to focus on my day-to-day. It’s been a busy few months as I’ve been working with a ton of employees and executives who have been planning for the end of year, as well as preparing for what many expect to be a big 2026 for the private market world.

The end-of-year planning around equity is always an interesting time, as we always see a big uptick in people reaching out for help on their options or equity. Often, it’s a forced deadline with a 409A expiring on 12/31 or for tax reasons, but we’ll also commonly see people setting an artificial deadline for themselves to actually get things done.

Despite the deadlines, it’s always interesting to see that a large number of folks still do not take action on their equity despite intending to. Of course, sometimes circumstances change or someone makes a conscious decision not to do anything. But there’s always a surprising number of people who come back in the new year saying they didn’t end up taking action, missed the window, and now want to pick things back up – despite being in a tougher financial situation than before.

Today, I wanted to discuss why this happens so commonly. Let’s jump in.

💰 First, what’s at stake when it comes to taking action on your equity?

Put simply, it could have a major financial impact.

Let’s use a simple example with rounded numbers. An employee at a leading AI company has 10,000 ISOs at a $10 per share strike price. The current 409A is $50, but will expire at year-end. That employee wants to exercise their options now, expecting next year’s 409A to jump significantly. If they exercised before year-end, they’d pay $100k for the strike price and then about $129k in taxes.¹

What happens in the new year? If the 409A goes up to $100, then the employee’s tax bill shoots up to $328k. Yes, that’s more than 2x the tax bill increase despite only a 2x increase in the 409A. Of course, this is a simplified example, but it’s very reflective of what we often see.

We know the financial impact can be big. So why is taking action on your startup equity still so hard?

🧐 Let’s get the obvious reasons out of the way first

Equity is complicated; employees have a lack of liquidity, and exercising stock options is risky.

Stock options in private companies can be complex. They’re essentially a leveraged financial instrument which requires you to understand startup dynamics, taxes, and “forecast” your company’s future outcome years ahead. When things are complicated, it’s easy to procrastinate.

Exercising options also requires capital, and many people simply don’t have that cash sitting around, or don’t want to take the risk. Even if someone understands their equity and wants to act, they may not have the means.

On top of that, exercising private-company options is inherently risky. There’s no guarantee of success or liquidity. You could lose it all.

Those are common blockers for a large portion of startup employees. In fact, Secfi has been working to tackle all three problems. We’ve still got a ways to go, but we’ve made a lot of progress over the last eight years. Still, these factors don’t always explain the entire picture.

We often work with executives and employees who do understand their equity and do have the means, or at least access to partners who can help. At larger companies, the risks are often lower due to recurring liquidity or an upcoming IPO.

Yet even when understanding, means, and risk are not blockers — we STILL see people not taking action despite intending to.

So what else is going on?

🧠 There is no instant gratification in financial planning

We are all human, and our brains love short-term pleasure. Whether it’s picking up your phone to scroll instead of doing homework or grabbing fast food instead of cooking, we crave immediate satisfaction. (This is why I can never live close to fast food again. Damn you, Taco Bell opening up on 18th and 1st.)

When it comes to money, is it surprising that gambling is so exciting? Winning money now is a thrill.

Unfortunately, planning around startup equity is the opposite of a casino win. Exercising options today doesn’t give you any immediate reward. You must spend time and effort navigating something complex for potential benefits years down the road. There’s almost zero immediate pleasure besides checking it off your to-do list.

If you have startup equity, you’ve probably done this. I went through it myself with my Secfi equity earlier this year. I knew I needed to do it. I knew it would likely help me. But man… watching Netflix sounded way more fun. That’s the difference between delayed gratification (hard) and instant gratification (easy). This makes it incredibly easy to procrastinate.
But the good news: if you overcome these psychological hurdles, the long-term benefits can be massive.

Back to our example: let’s say the employee at the AI company deletes TikTok for one Sunday evening and decides to get their equity plan done. They find a partner to fund the $100k exercise cost and $129k in taxes and exercise their 10,000 ISOs while the 409A is still $50.

Fast-forward 18 months: the company exits at $200 per share.

If that employee hadn’t exercised, they’d cash out $0.93M in gains after taxes. But because they exercised early, they cash out $1.22M, all taxed at long-term capital gains. That’s **$300k (30%) more.**¹

While equity planning rarely provides instant gratification, your future self might thank you for the action you took on a Sunday night when Netflix sounded more appealing. If you have startup equity and have been thinking about end of year planning, here’s your call to delay that gratification and get it done.

And if all else fails, you can do what I do: make a deal with yourself and reward yourself with Taco Bell after you finish your equity plan. Get the instant gratification and the long-term benefits.

As always, we’re here for you if you need us so feel free to reply back if you need help.

¹ Assume California resident for tax rate purposes. This is an illustrative example and there is no guarantee of any particular outcome. The value of your share may be less than the Fair Market Value. Please consult your tax advisor for your particular circumstance.

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