The Fund was formed by Stephen Roberts, Jimmy Lackie, and Scott Chou. The founders have 20+ years of experience in venture capital, private equity, and operations at entrepreneurial companies. Leveraging our knowledge, we have developed a flexible due diligence strategy and transaction protocol at ESO to rapidly evaluate and close transactions.
The Employee Stock Option Fund estimates that each year employees of venture-backed companies forfeit over $500 million in future earnings in the form of employee stock options that are not exercised. We seek to capture some of this value – delivering returns for option holders and the Fund. Moreover, tax revenue is generated on the appreciated equity value that is normally lost forever when a company reissues an abandoned option at the current fair market value to another employee.
Departing employees of venture-backed companies are often faced with the dilemma of either exercising their stock options immediately or letting the options expire worthless. This decision can be especially complex given the high failure rate and the long holding periods for startup companies. Who knows what can go wrong on down the line? Moreover, some employees will face Alternative Minimum Tax (AMT) requirements as the result of exercising stock options which can create additional financial distress. Despite the government's desire to protect small investors, nearly every startup company operates without regard to Rule 701 Disclosures which causes non-accredited investors to take enormous financial risks without the protection of any information.
The Employee Stock Option Fund protects employees by taking the risk out of exercising options. The Fund tracks the performance of over 20,000 startup companies and diversifies its risk across several hundred of the best companies each year in order for the employee to enjoy the benefits of their hard-earned equity without the downside. The Fund provides employees with the cash required to exercise their options, pay the associated taxes, and the possibility of future upside. If the stock becomes valueless, the Fund, not the employee, bears the loss. Individuals who have already exercised can still benefit by obtaining an advance against their stock under the same non-recourse terms. This can recover valuable capital to cover major expenses such as AMT while allowing the owner to still participate in the future upside of the stock.
Learn more about the ESO Fund
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exercise your stock options!
Employee Stock Option Fund
999 Baker Way Suite 400
San Mateo, CA 94404
tel: +1 (650) 262-6670