Israeli fintech startup helps tech workers crunch value of stock options


In the tech world, startups try to attract and leverage top talent by offering perks and benefits instead of cash. The most common is an employee stock option package in the event of retirement, which not only gives workers a stake in the firm but is also intended to keep them motivated and working harder so they can share in its success their future company.

Many tech employees working in startups count options as part of their compensation packages, and haggling over a higher salary is often less important than an options package. In the current economic and financial environment — where technology shares have weighed on global markets and depressed company valuations in both the public and private sectors — the value and prospect of employee option packages is also affected .

The market downturn, however, has caused thousands of workers to quit, prompting funding pullbacks and creating a bear market for new technology offerings and dashing startup workers’ dreams of lucrative payouts.

In 2022, the number of technology events from Israel – mergers and acquisitions or initial public offerings of shares – increased by 58% from the previous year. In this climate, startups may want to reprice their stock options to reflect market conditions, or fight their employees for extra cash compensation to keep them happy.

This is where Equitybee, an Israel-based fintech startup, comes in.

The startup announced Wednesday that it is launching a platform for startup employees to understand and calculate the estimated market value of their stock options and net worth, which could come in handy when negotiating compensation, at considering a new job offer, or planning their financial future. .

“Employees of high-tech public companies have clear visibility into the value of their stock grants. Why should private startup employees be any different?” said Equitybee co-founder and CEO Oren Barzilai. “Our mission has always been to empower employees to share in the success of the companies they helped build.”

“We believe that, in times of uncertainty, it is more important than ever that employees know their equity value and plan for the future,” Barzilai added.

Equitybee stock option value finder platform. (Courtesy)

The startup’s equity value finder model uses a proprietary model of multiple trading data sources, including a database of approximately 500 companies, valuations and market sentiment to estimate the dollar fair market value of stock options.

The platform “gives startup employees the ability to understand the market value of their compensation, make educated decisions about their financial future and even estimate their net worth,” the startup said.

The results of a recent survey of 1,000 employees by Equitybee showed that about 70% of startup workers who had been working for more than two years at a startup received more than one employee stock option grant, and 95% agreed that options would increase their perception of it. belonging in their company. About 38% of those surveyed did not know the value of their options and 15% did not have enough information to exercise their options.

Given the current downturn in the market, 66% said they prefer a higher salary with a smaller option grant and 99% responded that they do not fully exercise their options due to risk, according to the survey.

“Startup employees only know the value of their stock options so they rely mostly on guesswork and sometimes false hope,” Equitybee said in a statement. “As the challenges mount along with the collapse of Silicon Valley Bank, transparency toward the value of equity and stock options has never been more important.”

In 2018, Barzilai founded Equitybee with childhood friends Oded Golan and Mody Radashkovich to develop a stock option financing market that connects startup employees with accredited investors who seek to finance the purchase of stock options of private companies before they go public.

While startups are still privately held, the stock options are not tradable. But not everyone can afford to wait for payday, or have the money to pay the cost of fully exercising their options — that is, buying and cashing in on their equity.

Equitybee’s network of investors connects startups with the necessary funding to exercise their options, making them fair. In exchange, employees agree to share a percentage of the future stock value with the participating accredited investors after a successful exit.

Equitybee has helped over 1,700 startup employees exercise their stock options and become shareholders by connecting them with investors such as family offices and funds around the world, who gain access to high-growth, VC-backed startups with $30 they collected the least. million in capital. This includes Taboola, MyHeritage, SimilarWeb, MagicLeap and IronSource, according to the startup’s website.

The startup, with offices in Israel and the United States, has so far raised $85 million with the support of venture capital funds, including Group 11, Greenfield Partners, Battery Ventures and Zeev Ventures, as well as WeWork co-founder Adam Neumann.

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