SAN FRANCISCO--()--SharesPost, the market for today's fast-growing private companies, today launched the SharesPost Stock Option Loan Program. The innovative program enables private company option holders to fund the exercise of their options today and benefit from the tax and other advantages of direct ownership. For lenders, the program offers significant yields and exposure to some of the most exciting private growth companies.
“I was excited when the value of my options increased over time, but I couldn’t afford the upfront costs to exercise. SharesPost allowed me to exercise my options. Without their loan program, I would not have been able to fully realize the value that I created.”
SharesPost Stock Option Loans enable option holders of certain private, high-growth companies to maximize the potential value of their options. By exercising now, option holders begin the long-term capital gains holding period and potentially pay much less in tax on the ultimate sale of their shares. Borrowers have no payments due until the loan matures. Additionally, borrowers on certain loans may have the option of settling the loan through delivery of option shares to the lender.
“The high cost to exercise options causes many option holders to delay exercising until a liquidity event,” said Greg Brogger, founder and president of SharesPost. “This results in gains being taxed at ordinary income rates, which unnecessarily reduces the option holder’s after-tax sales proceeds, sometimes by hundreds of thousands of dollars.
“SharesPost Stock Option Loans offer option holders a great way to initiate their long-term capital gains holding period today. And, the ability to settle the loan in shares limits the borrower’s risk if the shares drop in value.”
For investors, the loans offer both attractive yields and equity exposure to the value appreciation of leading growth companies. Loans are collateralized by the underlying shares of the option exercise. At origination, the value of collateralized shares will represent a multiple of the loan amount, which provides a measure of protection to the loan principal, even in the event of a sharp decline in share price.
SharesPost Loans are attractive investments to institutional investors, family offices and sophisticated, high net worth individuals. SharesPost is building a network of preferred lenders to support the program and has entered into an agreement with The ESO Fund as the first such partner. The ESO Fund was recently founded by venture industry veterans and is dedicated to supporting option and equity holders of venture-backed private companies by providing loans to current and departing employees to enable them to exercise their stock options.
The issuing companies benefit by significantly increasing the after-tax value of stock option incentives awarded to employees. In today’s competitive market for executive talent, the program offers substantial recruiting and retention advantages.
SharesPost has already completed the program’s first loan. “My stock options were a critical part of my compensation package and a big part of the reason I took the job,” said the borrower, who was fully vested in her shares after 4 years with the company. “I was excited when the value of my options increased over time, but I couldn’t afford the upfront costs to exercise. SharesPost allowed me to exercise my options. Without their loan program, I would not have been able to fully realize the value that I created.”
Option holders, investors, and companies can learn more about the SharesPost Stock Option Loan Program and download informational materials for friends and coworkers on SharesPost’s website:
SharesPost is the market for today's fast-growing private companies, their shareholders and qualified investors. SharesPost enables companies to manage liquidity and raise primary capital online; provides investors access to private companies through direct investments and managed funds; offers shareholders liquidity options; and empowers option holders to exercise their options.
With a listing of over 150 fast-growing companies, an extensive network of investors assembled in one place online, and a broad offering of independent, third-party research and customized products and services, SharesPost brings greater efficiency, flexibility, and control to the process of raising capital, and buying or selling shares in the private capital market. SharesPost’s management team includes experienced executives from the financial services, banking, legal, technology and security sectors, with concentrated expertise in working with emerging industry leaders.
SharesPost is a registered broker-dealer, a member of FINRA and SIPC. For more information, please visit www.sharespost.com.