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A comment on Silicon Valley's best kept secret: Founder liquidity. Parent comment

Re:Silicon Valley's best kept secret: Founder liquidity by simonebrunozzi on Wednesday June 12, 2024 @01:26PM (#40660672)
You are not taking into account QSBS. [0]

When you sell your stocks before 5 years of holding period has passed, you pay significantly higher taxes. So you don't get 500k net, you get 500k gross, or probably 300k net. Which makes the de-risking less compelling.

[0]: https://www.investopedia.com/terms/q/qsbs-qualified-small-bu...

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Re:Silicon Valley's best kept secret: Founder liquidity by nine_k on Wednesday June 12, 2024 @02:32PM (#40661325)
This is when you immediately liquidate your stock position, instead of taking a loan using it as a collateral, which would likely cost you 10%-15% in interest, not 30%.
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Re:Silicon Valley's best kept secret: Founder liquidity by andrewmutz on Wednesday June 12, 2024 @02:52PM (#40661582)
No, in this example the person sold equity in order to get the 500K. They can't use the equity as collateral for the loan because they dont own it anymore
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Re:Silicon Valley's best kept secret: Founder liquidity by nine_k on Wednesday June 12, 2024 @03:28PM (#40661977)
Yes. They should not have if they were to optimize taxes.
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Re:Silicon Valley's best kept secret: Founder liquidity by tyre on Wednesday June 12, 2024 @04:15PM (#40662569)
But then they’re paying interest and very few startups are going to have stock that a someone will lend against. I cannot imagine someone taking Series A stock as collateral for a loan.
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Re:Silicon Valley's best kept secret: Founder liquidity by kelnos on Wednesday June 12, 2024 @08:57PM (#40664839)
I think it'd be pretty rare for a bank to accept equity in a series A startup as collateral for a loan.
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Re:Silicon Valley's best kept secret: Founder liquidity by andrewmutz on Wednesday June 12, 2024 @10:33PM (#40665366)
And even if it did, it wouldn't really derisk much for the founder, which was the original purpose of taking money off the table.
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Re:Silicon Valley's best kept secret: Founder liquidity by rKarpinski on Wednesday June 12, 2024 @08:26PM (#40664657)
Not sure why you are getting downvoted. There are multiple ways of structuring what is effectively selling the shares early that are not tax disadvantaged.
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Re:Silicon Valley's best kept secret: Founder liquidity by lotsofpulp on Wednesday June 12, 2024 @05:54PM (#40663632)
I do not see the purpose of this nitpick.

The numbers are made up anyway, adjust up by a few hundred thousand and the point that securing one’s shelter is worth foregoing winning the lottery still stands.

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