Israeli startup EquityBee launches in US with $6.6M in funding to help startup employees exercise their stock options
Nickie Louise
Posted On February 11, 2020
In the United States, startup employees, the company builders, forgo 50% of $60 Billion in unexercised stock options every year. When employees leave their startup, they have a limited amount of time to exercise their stock options before they expire. The cost to exercise can reach hundreds of thousands and sometimes millions of dollars, as the employee is required to purchase their stock as well as potentially pay substantial taxes on the theoretical profit at the time of exercising the options.
Very few employees have these financial resources available, causing 50% of employees to forgo their stock options, lose their hard-earned equity and the right of participating in the future success of the company they helped to build. Enter EquityBee, a Tel Aviv, Israel-based startup that aims to solve this massive failure by helping startup employees get the money they need to exercise their stock options before they expire.
Today, EquityBee announced it is launching today in the US with $6.6 million in funding to enable startup employees to obtain the capital they need to exercise their stock options. The round was led by Group11, with participation from Battery Ventures and LocalGlobe. The funding brings the total amount raised to $8.3 million. In the past year EquityBee enabled hundreds of Israeli startup employees to exercise their stock options, and now it will leverage its experience and vast Investor Community to support the U.S. market.
Founded in 2017 by three entrepreneurs and childhood best friends: Barzilai, Oded Golan (CPO), and Mody Radashkovich (COO), EquityBee offers a marketplace where startup employees who lack the necessary funds to exercise their stock options can find investors, in return for a part of the potential future gains. Its platform links employees with investors to provide option-holders the funding they need to exercise their options and unlock the value of their equity. The startup also connects employees with investors who provide them with the necessary funding they need to exercise and benefit from their employee stock options (ESO).
“As a serial entrepreneur and being part of the startup sphere for the last 15 years, I have witnessed countless employees, colleagues, and friends lose out on a significant part of their compensation because they couldn’t afford to exercise the options they worked so hard to earn. EquityBee is changing the situation and helping startup builders. We have successfully solved this problem for Israeli employees, and now EquityBee is ready to support every startup builder in the US,” says Oren Barzilai, CEO of EquityBee. “Our mission is to enable all startup builders to own their hard-earned equity and their share from the company they helped build.”
The Israeli startup has designed a system where employees, called “startup builders,” can partner with its investor community to access capital, exercise stock options, and become shareholders. The employees and the investors then share a portion of any future exit gains.
“The US is home to over 525,000 tech companies employing over 11.2 million tech workers of whom 6 million work for private tech companies. While inconceivable, as it stands today, a vast amount of these workers do not get to exercise or finance their stock options [and] thus lose annually about about $30 billion. This is why we invested in EquityBee. EquityBee aims to solve this massive market failure and help millions of employees realize what is rightfully theirs,” explained Dovi Frances, a founding partner at Group 11 who is joining the startup’s board.
