If founders treated their investors the same way they treated their employees

Re:If founders treated their investors the same way they tre... by cs-szazz on Tuesday August 18, 2020 @01:19PM (#24201394)

100% agree. I'm in the low 7-figures right now (on paper), and will probably be mid-7 with the next round of funding. So I have 0 chance of affording the taxes if I wanted to leave, and am kind of at the whim of the board if they want to extend my window.

It's not a great feeling, especially when you contributed a lot to the company at a very early stage. I am glad there's companies popping up to help with this problem, like ESO Fund, but in my opinion the companies should be trying to fix this instead.

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Re:If founders treated their investors the same way they tre... by nbclark on Tuesday August 18, 2020 @01:46PM (#24201732)

Without knowing your exact situation, one thing to keep in mind is that the preferred value (last valuation / # of shares) of a share is generally a good bit higher than the tax liability (value of a common share from the 409a minus your strike). Still likely a big tax hit, but perhaps slightly better. IMO changes to tax law for illiquid assets is the best but most unlikely option here.

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Re:If founders treated their investors the same way they tre... by cs-szazz on Tuesday August 18, 2020 @02:03PM (#24201998)

Yeah it's a good call out, in this case FMV is about 1/3rd the preferred. Sadly the that still puts it out of reach for me, but means I can afford to exercise at least some.

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