Exercising stock options is within every employee’s right. Regardless of their industry, stocks are considered a crucial component of their total compensation package.
A survey by National Center for Employee Ownership (NCEO) shows that 6,500 employee stock ownership plans encompass about 14 million participants in 2023, highlighting how employees see stock options as a valuable commodity.
Research shows that startup employees are typically granted 1% equity, and can usually be as high as 2% for first-time hires. Factors that weigh in these statistics include the startup’s nature, the value the employee brings to the company, as well as negotiations between the organization and the individual staff.
Nonetheless, many are still unaware of the inherent flaws in stock options and the existence of alternatives. This article will dive into the system’s gaps that have long existed and the solutions that can help ease the stock pains of employees.
Exploring the Cracks of the Stock Options System
For one, equity systems are excessively intricate for an ordinary worker to comprehend independently. When an employee is presented with their stock options documentation, it is a convoluted legal jargon that ideally should be reviewed by an attorney before signing. Engaging the services of a lawyer can be costly, and employees may not even be aware of the specific type of attorney they should seek.
Moreover, the lack of communication between the company and employees further widens this gap, leading them to rely on guesswork and occasionally misguided expectations. From insufficient information provided by organizations regarding equity to every employee’s lack of initiative to ask questions, the basics of exercising stock options are often swept under the rug.
Whether negotiating compensation, contemplating a job offer, or simply mapping out their financial trajectory, employees must determine and fully comprehend the market value of a substantial portion of their compensation. This is a glaring void that up-and-coming FinTech companies are trying to fill.
What Can Employees Do?
Organizations like Equitybee, a leading startup employees’ stock options funding platform, empower startup employees to participate in the success of the companies they helped build. Equitybee facilitates the provision of necessary funding to employees through its network of investors, enabling them to exercise their stock options and acquire ownership in the company or achieve early liquidity.
One major breakthrough in patching the cracks of the broken stock options system is the introduction of Equity Value Finder. Powered by Equitybee, this platform employs its exclusive model, which incorporates various data sources, valuations, and market sentiment, to provide an estimate of the market value. By aiming to enable employees to actively contribute to the prosperity of the company they played a part in establishing, the introduction of their newest product demonstrates their unmatched dedication to assisting startup employees in fully recognizing the potential and worth of their options.
Getting Started with Equity Value Finder
To jumpstart, users simply need to enter their company name and the number of options they hold. In a matter of seconds, the Equity Value Finder will generate the market value of their options using a combination of reliable sources and our exclusive data.
Understanding the value of one’s stock options is vital under normal circumstances, but it becomes even more critical during market downturns. This is evident in the difficulties faced by startups in 2022, with numerous valuations experiencing a decline.
Consequently, employees in startup companies should consistently stay informed about the value of their stock options and seek guidance from experts whenever necessary to navigate the intricacies of the market. As economic challenges continue to persist, transparency regarding equity value and stock options has become increasingly crucial.