Get an advance from ESO Fund to exercise your stock options
For people who work in private, venture backed companies, stock options typically represent the most potentially valuable asset they have. Note that key word—potentially. You might want to fund the option exercise with ESO to conserve cash while preserving upside potential.
You’ve worked for years to vest your stock, your dream job comes along but now you need to exercise.
Stock options aren't a sure thing. For every private company that goes public or is sold for a high price, many more are liquidated and the people who own common stock or exercised their options lose 100% of their investment. A very poorly understood problem is that all Preferred Stock owned by venture capitalists is paid off before common stockholders receive even one penny. In the Unicorn Age where companies have raised billions of dollars, this creates a formidable hurdle.
Your options: To exercise or not to exercise?
When people change jobs, they typically have at most 90 days to decide if they want to exercise their incentive stock options. For years, there were only 2 choices: exercise and take the risk of losing your investment or not exercise and lose the options and the possible profits. Moreover, selling the shares will truncate any possibility of future upside and is usually prohibited or impossible for all but the most famous startups.
New option: Get the cash needed to exercise
Now there is a choice that allows option holders to obtain upside with minimal risk — obtain a cash advance from the Employee Stock Option Fund and use that money to exercise your options. You retain title to the stock and ESO does not require any payments against the advance until the stock is liquid. Most importantly, employee stockholders retain the possibility of enjoying future appreciation in value. ESO can also advance funds for potential tax liabilities associated with the stock, such as Alternative Minimum Tax (AMT). Even if you can afford to exercise your options and pay your AMT that results in a significant bet on the company; by leveraging ESO's funding you can diversify your risk by investing in other assets instead. This can result in a safer and larger portfolio than if you merely invested in a single company (see modern portfolio theory for more).
An advance from ESO to exercise your options can provide you with significant upside and minimal risk. If you'd like to know more about how ESO can help your financial situation, please contact us.
"Friendly people who worked VERY quickly to make a deal in the last days of a possible stock exercise."
Series D Company, Silicon Valley
Fast. Trusted. Easy.
Fast. Trusted. Easy.
Complete our form and connect with an ESO Partner for a free 15 minute equity consultation.
Receive a Personalized Offer
In as little as 1 hour, you'll receive an offer personalized specifically to fit your unique financial situation and needs. ESO offer's are 100% risk-free. In exchange, we ask for a percentage of the stock plus a return of the original investment.
Close and Fund
Join your ESO Partner for an online closing via Zoom. The timeline from consultation to funding can take place in as little as 24 hours.