Click any of the questions below to go directly to the answer, or use the search bar.
How does this work?
Who owns the stock?
Is there any risk to the option holder?
Is this the same as a secondary market sale?
Is there a minimum or maximum transaction size?
Can I sell my stock to ESO Fund?
Will I be subject to Alternative Minimum Tax (AMT)?
How can venture-backed companies benefit from ESO Fund?
When can I sell my stock?
What criteria do you look for in a stock option?
What if I work for a publicly traded company?
How can executive recruiters benefit from ESO Fund?
Can ESO Fund help me with my options in a divorce settlement?
How does this work?
Who owns the stock?
Is there any risk to the option holder?
Is this the same as a secondary market sale?
Is there a minimum or maximum transaction size?
Can I sell my stock to ESO Fund?
Will I be subject to Alternative Minimum Tax (AMT)?
How can venture-backed companies benefit from ESO Fund?
When can I sell my stock?
What criteria do you look for in a stock option?
What if I work for a publicly traded company?
How can executive recruiters benefit from ESO Fund?
Can ESO Fund help me with my options in a divorce settlement?
How does this work?
First, we engage in a rapid but thorough evaluation of the company in which you hold stock options. If we decide to proceed with a transaction, the ESO Fund will provide you with the funds to pay the cost of exercising your stock options. When and if the company you hold stock in has a liquidity event, such as a merger, sale, or IPO, we will share the proceeds according to the terms of our agreement. If you already own your shares outright, then we can provide an advance against those shares under the same terms.
First, we engage in a rapid but thorough evaluation of the company in which you hold stock options. If we decide to proceed with a transaction, the ESO Fund will provide you with the funds to pay the cost of exercising your stock options. When and if the company you hold stock in has a liquidity event, such as a merger, sale, or IPO, we will share the proceeds according to the terms of our agreement. If you already own your shares outright, then we can provide an advance against those shares under the same terms.
Who owns the stock?
You do as the person who exercised your stock options. We enter into an agreement directly with you regarding the sharing of proceeds, if any, from a liquidity event.
You do as the person who exercised your stock options. We enter into an agreement directly with you regarding the sharing of proceeds, if any, from a liquidity event.
Is there any risk to the option holder?
Many venture-backed companies fail and investors lose their entire investment. Many option-holders paid to exercise their options in the dot-com boom, only for the stock to become worthless. Moreover, the IRS still collected AMT tax from the optionees based on the exercise price even though the stock had become worthless. The ESO Fund assumes the financial risk associated with exercising stock options, and will not seek payment from you should your stock sell for less than the amount of the original exercise price.
Many venture-backed companies fail and investors lose their entire investment. Many option-holders paid to exercise their options in the dot-com boom, only for the stock to become worthless. Moreover, the IRS still collected AMT tax from the optionees based on the exercise price even though the stock had become worthless. The ESO Fund assumes the financial risk associated with exercising stock options, and will not seek payment from you should your stock sell for less than the amount of the original exercise price.
Is this the same as a secondary market sale?
No, in a secondary market sale, you forfeit all future profits in exchange for a fixed price at the time of the sale. Rather than giving away all potential future value of your shares via a secondary sale, a transaction with the ESO Fund allows you to retain the upside potential on a shared basis with the Fund.
No, in a secondary market sale, you forfeit all future profits in exchange for a fixed price at the time of the sale. Rather than giving away all potential future value of your shares via a secondary sale, a transaction with the ESO Fund allows you to retain the upside potential on a shared basis with the Fund.
Is there a minimum or maximum transaction size?
We will consider advances up to a maximum of $3 million. On the other hand, there is no minimum size. We will gladly make advances of only a few thousand dollars.
We will consider advances up to a maximum of $3 million. On the other hand, there is no minimum size. We will gladly make advances of only a few thousand dollars.
Can I sell my stock to ESO Fund?
No, we prefer stock that still has substantial appreciation potential. If your stock has not yet appreciated significantly, you should consider getting an advance from ESO instead of selling it. By doing so, you retain the possibility of unlimited appreciation upside while recouping your cash and passing the risk on to the ESO Fund instead. When considering a sale, be sure that you aren't holding restricted stock from an early exercise that is still subject to vesting. If so, don't forget to file an 83(b) with the IRS.
No, we prefer stock that still has substantial appreciation potential. If your stock has not yet appreciated significantly, you should consider getting an advance from ESO instead of selling it. By doing so, you retain the possibility of unlimited appreciation upside while recouping your cash and passing the risk on to the ESO Fund instead. When considering a sale, be sure that you aren't holding restricted stock from an early exercise that is still subject to vesting. If so, don't forget to file an 83(b) with the IRS.
Will I be subject to Alternative Minimum Tax (AMT)?
It is common to exercise early in an effort to qualify for long term capital gains tax treatment and to avoid future increases in fair market value that subject you to very large AMT.The AMT penalty depends on your option grant and financial situation. Please see our Alternative Minimum Tax resource page for more information.
It is common to exercise early in an effort to qualify for long term capital gains tax treatment and to avoid future increases in fair market value that subject you to very large AMT.The AMT penalty depends on your option grant and financial situation. Please see our Alternative Minimum Tax resource page for more information.
How can venture-backed companies benefit from ESO Fund?
If your company is doing really well but circumstances are delaying your IPO, consider using the ESO Fund to provide partial liquidity for your employees.
If your company is doing really well but circumstances are delaying your IPO, consider using the ESO Fund to provide partial liquidity for your employees.
When can I sell my stock?
If the company issuing the stock goes public, the ESO Fund will work closely with you to determine the best timing to maximize profits subject to trading restrictions such as the lock-up period and Rule 144. If the issuing company is acquired, the distribution of your proceeds is usually divided into 2 or 3 periods: initial closing of the transaction, performance earn-out, and the final distribution of the holdback escrow. Although most of the money is usually received up front, the latter 2 events are usually several years down the road. Selling your private stock on the secondary market is another possibility that ESO will consider subject to the minimum one year holding requirements for long term capital gains and SEC Rule 144.
If the company issuing the stock goes public, the ESO Fund will work closely with you to determine the best timing to maximize profits subject to trading restrictions such as the lock-up period and Rule 144. If the issuing company is acquired, the distribution of your proceeds is usually divided into 2 or 3 periods: initial closing of the transaction, performance earn-out, and the final distribution of the holdback escrow. Although most of the money is usually received up front, the latter 2 events are usually several years down the road. Selling your private stock on the secondary market is another possibility that ESO will consider subject to the minimum one year holding requirements for long term capital gains and SEC Rule 144.
What criteria do you look for in a stock option?
The most important criteria are the prospects of the venture-backed company in which you hold options. The company should have an innovative business with a large potential market, outstanding management, a well-funded business plan, and experienced investors.
The most important criteria are the prospects of the venture-backed company in which you hold options. The company should have an innovative business with a large potential market, outstanding management, a well-funded business plan, and experienced investors.
What if I work for a publicly traded company?
ESO Fund does not loan against stocks in publicly traded companies because numerous companies such as your brokerage firm can already do this for you. If you have stock options that are below water, see Lombard Street Partners on our Resources Page for more information.
ESO Fund does not loan against stocks in publicly traded companies because numerous companies such as your brokerage firm can already do this for you. If you have stock options that are below water, see Lombard Street Partners on our Resources Page for more information.
How can executive recruiters benefit from ESO Fund?
The ESO Fund can unlock the proverbial golden handcuffs that prevent job prospects from leaving their current jobs. See our recruiter resource page for more information.
The ESO Fund can unlock the proverbial golden handcuffs that prevent job prospects from leaving their current jobs. See our recruiter resource page for more information.
Can I get an ESO loan for options in a divorce settlement?
Incentive Stock Options are usually not transferable to other parties including spouses. However, you can use an ESO advance to exercise the options and then divide up the resulting shares of stock. Click for more information.
Incentive Stock Options are usually not transferable to other parties including spouses. However, you can use an ESO advance to exercise the options and then divide up the resulting shares of stock. Click for more information.