IAMAM

SADNESS

Exercising Stock Options

I recently left my company and I have <90 days to exercise my stock options or lose them. The company is private, but I believe the intent is to IPO, although market conditions may have slowed that timeline. Is there any sort of tool or resources to determine whether or not exercising is in one's best interest? All things considered, I've certainly invested in riskier moves, but it's a fairly substantial chunk of cash to shell out. Would love to hear some thoughts!

🧠 Advice

💰 Compensation

📉 Equity

25 comments

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braintank

Politicker

Enterprise Account Executive

Every company believes it will IPO...

How much is it going to cost you?

IAMAM

Catalyst

SADNESS

$11k-ish for my 1200 or so vested shares

braintank

Politicker

Enterprise Account Executive

That's a lot of dough -- especially if it means dipping into savings.

Why'd you leave?

How much funding they have? What's their ARR and year-over-year growth past few years?

CuriousFox

WR Officer

🦊

All valid questions 🤔

jefe

Arsonist

🍁

Very, VERY good questions.

IAMAM

Catalyst

SADNESS

Left for another opportunity with better quota attainment opportunity (old company increased quotas 40% at start of year, but that’s a different convo). Last funding round was at $4.2B valuation. Something around $150-200M ARR. YoY growth has been strong, but saw a dip in Q2.

boredAnti

Tycoon

That One Guy

If you truly feel that they will IPO, then go for it

SalesArmyKnife

Good Citizen

Sales Manager

The couple of metrics you shared look good. My last 3 companies have exited (1 acquisition and 2 IPOs) but I always had doubts about exercising my options or enrolling into ESPPs as when inside the company you always tend to see of all the negatives / things that aren’t well run.

I can tell you that it’s the case for all companies including the public ones.

As you rightly mentioned this is an investment and when making it you should be mentally ready to lose it all.

I would think of that money being locked for at least 10 years (even if the company IPOs I wouldn’t sell at that time) so if investing it gets in the way of major life decisions (like buying a jacuzzi ?) I would question it or if you’re bullish about it maybe repurpose some money already invested elsewhere if possible.

My 2 cents and agree with the recommendation of asking a financial advisor.

Kosta_Konfucius

Politicker

ERP Sales

Not an expert but found this

https://www.nerdwallet.com/article/investing/exercise-stock-options

coletrain

Politicker

Account Executive

Seems you are leaning towards vesting. Based on your experience and trends you saw there, do you strongly believe the company will get more funding and IPO?

IAMAM

Catalyst

SADNESS

There was talk of IPO and CEO has stated that’s the plan, I just don’t know if it’s 6 months, 12 months, or 5 years 🤷🏼‍♂️

coletrain

Politicker

Account Executive

There’s what the CEO says and the reality. What series funding are we dealing with? Was any sort of timeline hinted at?

tightlines

Tycoon

Account Executive

Liquidate and invest in index funds

IAMAM

Catalyst

SADNESS

I’m pretty diversified as is, would be pulling out of savings to exercise.

tightlines

Tycoon

Account Executive

Have you walked through with you financial advisor? That would be my next recommendation (first was from mine)

saaskicker

Tycoon

Enterprise AE

Ask a C Level at the company you are close with what they have done / if they have exercised.

KwotaKrusher

Valued Contributor

Sales Executive

Most startup equity is worthless unless they are on track to hit $100M+ in ARR IMO

IAMAM

Catalyst

SADNESS

Already past $100M ARR

KwotaKrusher

Valued Contributor

Sales Executive

Maybe consider buying then!

Tres

Politicker

Account Executive

Leave your money in and hope for an IPO

braintank

Politicker

Enterprise Account Executive

If I did this at every startup I've worked at I'd be broke :)

saaskicker

Tycoon

Enterprise AE

same.

Tres

Politicker

Account Executive

For your own money you've put into stock options or just what they offered you?

saaskicker

Tycoon

Enterprise AE

if i had used my own money to by my stock/options/equity grants, i would be broke. they rarely pan out.

what valuation was your company at during the last fundraising round?

IAMAM

Catalyst

SADNESS

$4.2b