. Instead, they negotiate for options, or unvested shares in a private company. In exchange for working long hours and building the company, employees are essentially granted a small stake in the company itself.But as l, those options look more like a liability than a ticket to millionaire status. "We've seen a significant increase [in activity] during March, almost double from the previous month," EquityBee cofounder and CEO Oren Barzilai told Business Insider.
"Many employees don't understand that there is a tax payment associated with stock options," Barzilai said. "That payment can be way higher than the actual strike price. If they joined at the right time, early on at the company and it grew significantly, that tax bill can be very significant." That uncertainty is compounded by the fact that purchasing the options becomes a very long-term investment that is hard to get out of, should an employee need to. Because options are shares of a private company, employees won't see any potential return until the company has an exit, such as an acquisition or public offering.
But a large percentage are ramping up their investments, he said, and expecting better terms from the employees, just as traditional VCs have started negotiating with founders themselves.
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Source: BusinessInsider - 🏆 729. / 51 Read more »
Source: BusinessInsider - 🏆 729. / 51 Read more »