EquityBee raises $20M to help startup employees actually afford their stock options
EquityBee, a#nbsp;stock option marketplace startup, has raised $#nbsp;20 million in#nbsp;a#nbsp;Series A#nbsp;round of#nbsp;funding.
Group 11 led the financing, which also included participation from Oren Zeev Ventures, Battery Ventures and ICON Continuity Fund. It#nbsp;brings the company’s total raised to#nbsp;over $#nbsp;28 million since its 2018 inception.
EquityBee CEO and co-founder Oren Barzilai says his company’s mission is#nbsp;to#nbsp;help educate startup employees on#nbsp;the meaning of#nbsp;their stock options, as#nbsp;well as#nbsp;provide them with funds to#nbsp;be#nbsp;able to#nbsp;purchase them.
"I have seen many of#nbsp;my#nbsp;friends and colleagues negotiate a $#nbsp;500 salary increase, but completely disregard their stock options package, from lack of#nbsp;knowledge due to#nbsp;the whole field of#nbsp;startup stock options being opaque," said Barzilai, who also founded Tapingo, which was acquired by#nbsp;Grubhub in#nbsp;2018 for $#nbsp;150 million. "As a#nbsp;founder I#nbsp;saw my#nbsp;team members who helped build the company not take part in#nbsp;our success because they left prematurely and didn’t exercise their stock options."
The way it#nbsp;works is#nbsp;fairly straightforward. EquityBee provides capital to#nbsp;startup employees so#nbsp;they can purchase stock options. The employees get money to#nbsp;cover the cost of#nbsp;exercising their stock options and the taxes. The investors who helped provide the funding so#nbsp;they could do#nbsp;that get a#nbsp;return, or#nbsp;a#nbsp;share of#nbsp;the profit, if#nbsp;there’s "a liquidity event." EquityBee makes money by#nbsp;charging an#nbsp;upfront fee from the investor on#nbsp;the investment day, as#nbsp;well as#nbsp;any carried interest upon a#nbsp;successful exit or#nbsp;IPO.
Barzilai said that many employees don’t realize they have about 90 days to#nbsp;exercise options before they expire once they leave a#nbsp;company. And even if#nbsp;they do, they may not always have the money to#nbsp;exercise them. That’s where EquityBee wants to#nbsp;help.
The company was originally founded in#nbsp;Israel before launching in#nbsp;the U.S. market, and moved its headquarters to#nbsp;Silicon Valley in#nbsp;February 2020. Since then, it’s funded employees from "hundreds" of#nbsp;companies, including Airbnb, Palantir, DoorDash and Unity, with capital provided by#nbsp;family offices, funds and high-net individuals. Its investor community is#nbsp;made up#nbsp;of#nbsp;8,000 funds, family offices and high-net worth individuals.
2020 was a#nbsp;good year for EquityBee, according to#nbsp;Barzilai, who says it#nbsp;grew by#nbsp;more than 560% the amount of#nbsp;money it#nbsp;raised to#nbsp;fund employee stock options. It#nbsp;also saw a#nbsp;360% increase in#nbsp;the number of#nbsp;individual employees funded through its platform.
Looking ahead, the 33-person company plans to#nbsp;use the money toward hiring and expanding product offerings.
Dovi Frances, founding partner of#nbsp;Group 11, said it#nbsp;doubled down on#nbsp;EquityBee after backing the company in#nbsp;its $#nbsp;6.6 million funding round in#nbsp;February 2020 because it’s impressed by#nbsp;what it#nbsp;described as#nbsp;the company’s "perfect product market fit" and triple-digit growth.