Ask HN: Can I get a loan based on my US startup equity?

https://news.ycombinator.com/item?id=32009256

by equityloan • 4 years ago

4 9 4 years ago

news.ycombinator.com

I was an early employee at a US startup that is now a unicorn. I vested and exercised some shares before leaving and they are now worth 7 figures. I'm hoping that the company will go public whenever the next IPO window opens.

I would really like to get access to some of this capital to diversify my assets and reduce risk, pay off some debts, and maybe put a down payment on a house.

The main problem is that I'm from New Zealand, and I am not a US citizen. I lived in the US for a few years on an O-1 visa. I live in New Zealand now, and I am no longer a US resident.

I tried to use EquityZen [1] a few years ago, but unfortunately the company blocked the sale. I also talked to ESO Fund [2], but they weren't able to work with me since I wasn't a US citizen or resident. I've just sent an application to Quid [3] and have requested a call, so I'm waiting to see if that might be an option.

I'm wondering if there are any other options where I don't need to sell any shares? I'm looking for around $150k USD.

I would also be interested to hear from any individuals who might be interested in setting up a loan arrangement similar to Quid. Please send me an email if you're interested: equityloan65@gmail.com

I have a Shareworks [4] account that shows the number of vested common shares, and a recent 409a update with the current price.

I found this HN post from a few months ago [5]. Please let me know if there are any other posts I should take a look at on HN, Reddit, etc.

[1] https://equityzen.com

[2] https://esofund.com

[3] https://www.getquid.com

[4] https://www.shareworks.com

[5] https://news.ycombinator.com/item?id=30274024

YuriNiyazov• 4 years ago

I am surprised that the company could block the sale. Usually they can't just block it, they have a right of first refusal which is where they have to buy it from you at the same price that's being offered.

equityloan2• 4 years ago

Apparently this is (or was?) a common practice in Silicon Valley. It's unfortunate, but I can also see how it's a sensible policy that avoids some problems.

Shatnerz• 4 years ago

Depending on the setup, companies can often block/disallow secondary market sales. It almost feels standard at this point.

I don't know if it has a specific name, but I believe it is possible to work around the company in cases like this. You basically setup a contract where you accept money and then agree the transfer shares as soon as they become liquid. No transfer of ownership happens beforehand so the company is left out of the process entirely.

I have never tried it, but I always thought it was an interesting concept since I first heard about it.

hunterb123• 4 years ago

What an interesting insight to another world this post is.

pacarvalho• 4 years ago

If you manage to resolve this, please update us! Very curious to learn more.

brudgers• 4 years ago

Have you talked with your former employer?

Maybe they would be interested in acquiring the shares.

For what it is worth, a loan against the shares isn’t diversification.

Also, illiquid shares are unlikely to be an attractive form of collateral to most people in a position to lend.

Good luck.

b200002• 4 years ago

why didn’t you sell them before you left?

equityloan2• 4 years ago

I left many years ago when they were only worth low 5 figures, so that would have been a very bad idea. They've appreciated a lot over the years as the company has kept growing.

b200002• 4 years ago

ok, makes sense

Ask HN: Can I get a loan based on my US startup equity?

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