- Secondary markets let shareholders in startups sell before the companies go public.
- Insider spoke with three current and former startup employees who had used such services.
- One ex-employee gave up 50% of his equity so that he could exercise his options and cash out.
- See more stories on Insider’s business page.
In April, Ashley Lewis was under pressure to come up with a large sum of money.
She’d recently left a startup and had three months before her stock options expired. Exercising them so that she could buy the stock meant paying a fortune up front for shares that could make her wealthy someday, or end up worthless.
“There’s a ticking clock once you leave the company,” she said.
Lewis had heard about secondary markets – services that let people sell their shares or get money for their stock options before the companies go public – but knew little about how they worked.
On Reddit, she asked if others had encountered any hiccups using them. Her post resulted in several offers from would-be investors.
In the end, she opted for two services. She’d use her own money to exercise some of her options and sell them on an exchange called EquityZen. Then she’d use a service called EquityBee to fund buying the remaining portion. This way, she could get immediate cash but still hold on to some shares…