Silicon Valley's best kept secret: Founder liquidity

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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