TLDR
A side-by-side breakdown of how ESO Fund and EquityBee differ across funding terms, process, and more.
If you're a startup employee looking to exercise your stock options but need financial support, you've likely come across ESO Fund and EquityBee. Both companies offer non-recourse funding, meaning you don’t owe anything if your stock never becomes valuable. However, the terms, structure, and overall client experience differ significantly.
Before making a decision, it's important to understand how these two options compare: especially when it comes to cost, transparency, and long-term financial impact.
How ESO Fund and EquityBee Help Employees Exercise Stock Options
Both ESO Fund and EquityBee provide non-recourse funding, which means:
✅ You receive funding to cover your stock option exercise cost and associated taxes.
✅ No personal liability. If your stock ends up worthless, you owe nothing.
✅ You retain ownership of your shares and potential upside.
While the core offering is similar, the terms and structure of the funding vary significantly.
Key Differences Between ESO Fund and EquityBee
No Interest vs. Accruing Costs
- ESO Fund: ESO Fund does not charge interest on the funding provided. Instead, we take a portion of your equity in addition to a return of the original funding amount, aligning our interests with yours.
- EquityBee: EquityBee charges interest that accrues over time, meaning the longer it takes for your company to exit, the more you owe. This interest is charged on top of an equity sharing percentage.
Why it matters: If your company takes years to exit, compounding interest can dramatically increase the cost of your option exercise funding.
Transparent Terms vs. Additional Fees
- ESO Fund: No hidden fees, no maintenance costs, and no unexpected charges. You know upfront exactly what portion of your future gains will go to ESO Fund. ESO Fund simply gets a percentage of the shares plus a return of the original investment.
- EquityBee: EquityBee’s funding services involve several fees:
- Placement Fee: A 5% fee based on the funding amount (only due if there is an exit).
- Stock Appreciation Fee: An additional 5% IF there is a successful exit resulting in a profit.
- Interest: Interest on the initial funding amount that acrues over time.
- Sharing Percentage: Like ESO Fund, EquityBee takes a portion of the shares’ value at exit.
Why it matters: Unexpected ongoing fees can eat into your returns and add financial uncertainty. These fees don’t always make EquityBee the more expensive option, but their complexity can impact your total cost. It's important to factor them into your decision.
Personal Partnerships vs. Marketplace
- ESO Fund: We prioritize personalized service, working directly with employees to tailor funding to their needs. Our team takes the time to answer questions, clarify the tradeoffs, and help you make the best choice for your financial future. Beyond funding, we stay on as partners through an exit: helping you navigate secondary sales and supporting you through an IPO or M&A. Since, we are the direct investor, hence the name "ESO Fund", our term sheet means we're ready to fund as soon as you are.
- EquityBee: EquityBee connects employees to a marketplace of third-party investors who fund option exercises in exchange for a share of future proceeds. The structure resembles a secondary sale in that employees give up upside in exchange for funding from third-party backers.
Why it matters: If you want a dedicated partner who knows your situation and works with you throughout the process, rather than a marketplace match with a third party, ESO Fund offers a more hands-on approach. Check out some of our reviews!
Fast Decisions vs. Marketplace Delays
- ESO Fund: As a direct funder, we make decisions quickly: sometimes in as little as 24 hours, and typically within 1 to 2 weeks.
- EquityBee: Funding depends on matching with a third-party investor, and timing can depend on investor interest and underwriting outcomes. Underwriting and approval are required, and terms depend on perceived company risk. Even after agreeing to terms and waiting for an investor, funding is not guaranteed.
Why it matters: If your 90-day post-termination exercise window is closing, speed is critical.
Choosing the Right Partner
Both ESO Fund and EquityBee help startup employees exercise their stock options. However, the differences in cost structure and process can have a major impact on your financial outcome.
The Bottom Line: Keep More of Your Equity with ESO Fund
If you're looking for a straightforward, risk-free way to exercise your stock options, ESO Fund offers a transparent, interest-free solution with no hidden fees.
Get in touch today to explore how ESO Fund can help you exercise your stock options.
Frequently Asked Questions
What does ESO Fund do?
ESO Fund helps startup employees exercise their stock options without risking their own cash. We provide non-recourse funding, covering 100% of the exercise cost and taxes, so employees can retain ownership and benefit from future upside. If the company doesn’t succeed, you owe us nothing—we take on all the risk.
Are there any hidden fees with ESO Fund’s funding?
No, ESO Fund has no hidden fees. The funding structure is transparent, with no interest or unexpected costs.
Does ESO Fund charge interest like other funding options?
No, ESO Fund does not charge interest. Instead, ESO Fund takes a percetnage of the shares, ensuring your funding is aligned with your success.
