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You need to provide liquidity to your shareholders at some point, so yes. Investors and employees have been waiting 10 years to cash out. They helped build the
by undefined3840 7y ago
You need to provide liquidity to your shareholders at some point, so yes. Investors and employees have been waiting 10 years to cash out. They helped build the business and deserve to be rewarded at a certain point. A decade is stretching it IMO.
- kgwxd 7y agoIm a complete newb to this. Can someone not sell their shares freely, regardless of public staus, if they do their own marketing?
- scurvy 7y agoMany companies have right of first refusal on any private share transfers. You need to offer the shares back to the company at whatever sales price you agreed to with a third party. Most times, the company can just sit on the offer and never actually respond. There are no timeliness clauses or guarantees when evaluating the offer. Notoriously, this happens with companies like Uber. If you were friends with Travis, you could sell. If not, you'll go pound sand. Investors also want to see the books and numbers. Not everyone can sell on hype alone. Even leaked numbers from Uber were taken with huge grains of salt. Over the counter arrangements and warrants are on dubious legal standings with regards to transfer-controlled private "stock units". Actual shares are a different story, but everyone gives out "stock units" and not shares. It might seem pedantic, but there's a gulf of difference while the company is still private.
- iamaelephant 7y agoShares can be bought and sold privately. They don't need to be publicly listed to cash out.
- alasdair_ 7y agoIn theory, sure, but almost every startup I’ve seen makes board approval a requirement of the transfer.
- kick 7y agoWhy do they "deserve" to? I fail to see how they're owed anything (that wasn't in their contract); it's business, and venture capitalists aren't innocent when it comes to harming businesses due to greed.
- jakelazaroff 7y agoBecause they built the business? Just because something’s in a contract doesn’t mean it’s not exploitative.
- mikeg8 7y agoThe old fashioned way shareholders would receive liquidity was through distributed earnings aka profit sharing; this is still a viable option. Employees receive a salary and shoulder little risk relative to shareholders/investors so I'm not sure I agree they "deserve" to be rewarded in the same way.
- scurvy 7y agoEmployees are shareholders, too.
- mikeg8 7y agoIf they do not own shares, no, they are not a shareholder. Companies want employees to feel like shareholders as it should increase productivity.
- scurvy 7y agoUpon vesting, any employee can exercise one share and become a stockholder. It's a great way to see the books, too. But your tone in treating employees and shareholders was very antagonistic. The vibe in startups has always been "we're in this together." Not, "I'm the boss/investor and you're the cog."
- mikeg8 7y agoNot trying to be antagonistic, but precise. You say "upon vesting" which makes the assumption all employees are granted options. This is not the case. I don't see anything wrong with simply being a payed employee, receiving a fair salary for the work performed. If someone wants to be guaranteed a shareholder position, they absolutely can! By starting a company of their own. That is the beauty of our economic system. Not everyone is entitled to ownership at their place of work, nor should they be.
- undefined3840 7y agoMost full time employees at VC backed companies will receive stock comp as part of their compensation.