Anyone have experience using esofund.com or similar to buy vested stock options? How does it work? What to look out for?
Not sure if it is legal or not. You both have to sign NDA anyway. They take the lost if your company never goes public.
It is legal because it is a loan, and non-recourse at that. You are not selling shares or even pledging them. This is why they run your credit and turn people with bad credit away. I never had to submit 701 documents but would love to hear elaboration. I have dealt with them but walked away twice. They collect a percentage of your gross proceeds after the liquidity event (usually IPO) ranging from 10%-40% and then ask for a fixed fee of 1-2X of whatever they loaned you. If you have zero cash to exercise then this might be worth it but it really amounts to a long-term high dollar payday loan where you may pay back triple what you borrowed. But if you change your perspective to you selling them a portion of your stock portfolio, you can squint and make sense of what they offer. AMT can be spread through an installation agreement with the IRS plus you usually get it all back eventually so I don't care about using ESO to pay taxes. And yes if the company goes bust, you don't owe anything. But they will do their homework and if your company looks shaky, they won't make a deal with you.
Could you please elaborate more on how getting back paid AMT works?
I tried to work with them, not very professional and not very responsive. They took so long that it ended up falling through.
Thanks for the information, very helpful. Are there other companies like ESO?
Sharespost loans
I’ve had good experiences with ESO fund. If you leave a company and your options are going to evaporate, then ESO is awesome as they fund your option exercise in exchange for a portion of future proceeds. I sure as fuck wasn’t going to risk my own money on the exercise so for me it made sense.
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They will ask for 701 statements to evaluate if they wanna proceed, if so they will provide money to exercise and pay tax. When your company goes public, you have to sell and repay the money they gave you, after that they take 30% of the revenue too.
Is giving them 701 statements legal? What happens if the company never goes public