Upon joining London-based ride-sharing startup Karhoo as employees No. 4 and No. 30 in 2015, Wouter Witvoet and Frederik Mijnhardt were excited to learn their compensation packages included stock options in the business. It was the first time they had received such a benefit, and they dreamed of the riches they’d rake in.
Then came the wake-up call. When Witvoet left the company a year later, they discovered he had just about 90 days to exercise his options, not to mention an income tax bill in excess of $1 million headed his way. Without the cash or a bank to lend them money against private stock, an entire equity package was lost.
“I was looking around in the office, and there were 250 people working there, and I'm like, none of my colleagues know what's coming for them,” Mijnhardt says. “That was our hypothesis.”
So in 2017, Witvoet and Mijnhardt, now the company’s CEO, founded Secfi to help startup employees understand and make better financial decisions about their equity packages and exercise their options. On Tuesday, Secfi announced it has reached $700 million in financing capital after a $150 million investment from New York-based Serengeti Asset Management.
With nearly $17 billion worth of startup stock options registered on the platform, up 466% from $3 billion in 2019, Mijnhardt expects to see $38 billion by year-end. At a valuation Mijnhardt says is $42 million, Secfi works with current and former employees of 80% of all U.S.-based unicorn tech companies, including Airbnb, DoorDash, Palantir and Snowflake.
Secfi works with current and former employees of 80% of all U.S.-based unicorn tech companies
Courtesy of SecFiStartup employees looking for assistance with their equity packages can sign up for a free Secfi account, through which they can access tools to calculate their potential payouts and estimate their tax bills, if they choose to exercise their options. They can also speak with experts about their benefits package.
“There's a lot of complicated and difficult decisions to make, and there are really big financial consequences if you don't make the right decisions,” Mijnhardt says. “It can put you in a really tough situation where you're afraid to quit your job because you might lose that entire package. We’ve all heard of the concept of golden handcuffs—that's sort of what happens.”
The company also provides financing for employees who want to exercise their options but lack the cash to do so. For a fee that varies based on the risk profile of the company, Secfi covers the exercise costs and taxes, and employees only have to make payments against the financing when their employers go public or through another type of liquidity event.
Jody LaNasa, founder and managing partner at Serengeti, says his investment firm has provided financing to current and former employees of more than 70 different startups—a number he intends to increase with this latest round.
“I get to spend my days learning about how the most disruptive, transformative companies are learning and functioning,” LaNasa says. “It’s been great working with Secfi to help all these employees preserve the wealth they’ve generated from years of hard work.”
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