November 19, 2021

Frederik Mijnhardt

This year was a big year in the startup community. The first half of 2021 set records for both investment funding — the amount investors poured into startups — and the number of newly minted unicorns, companies that have achieved a $1 billion valuation. So far this year, there have been 417 IPOs filed, a 106.4 percent increase compared with the same period in 2020. That’s creating life-changing financial opportunities for employees. But they’re not all getting the information and education they need from their companies.

We recently surveyed more than 1,000 startup employees who exercised their stock options to understand their personal motivations and the role their companies played in their decision-making process. 

They want their companies to educate them about equity — but most aren’t

Startup employees say that equity education is a key motivator for joining, staying, and feeling valued at their company:

  • 90 percent say they would be more likely to join a company that offers equity education.
  • 88 percent say they’d be more likely to stay at their job if their company offered stock option education.
  • 91 percent say they would feel more valued if their company offered equity education.

In fact, they may just value education more than the equity compensation itself:

Startup employees say they value being educated about stock options (87 percent) more than the options themselves (78 percent).

Yet 57 percent of companies didn’t provide the key details necessary for employees to understand their equity, the respondents said. Companies should take note, especially in a hiring environment where there are more job opportunities than candidates. 

Offering equity compensation may no longer be enough. Employees also want to better understand how exercising stock options can trigger high upfront exercise costs due to complex taxes. 

Equity is one of the biggest personal financial decisions a startup employee might ever make. That’s why financial literacy is key. Imagine buying a house without consulting an agent, viewing homes, or working with a mortgage broker. Yet, many employees are left to figure out how their equity works on their own.

Companies are leading the way with equity education as a key benefit

There are many startups that are leading the way by educating their employees proactively about their equity so they can make more informed decisions. That’s why we’re thrilled to partner with Figure and work with employees at other leading startups like Cameo.

“When we asked our employees about one of the most meaningful financial wellness benefits we could offer, they asked us to help them understand and own their stock options ahead of important events like funding rounds so they know the implications and full cost of exercising their options,” says TJ Milani, Chief Financial Officer at Figure.  

It’s not just Figure employees, or those at Cameo, that are looking to better understand their equity. This demand for equity education is also reflected in Secfi’s growth over the last year:

  • Secfi has helped more than 15,000 startup employees with equity planning, representing $21 billion registered on the platform, which is a 345 percent increase from 2020.  
  • Secfi has worked with employees from almost every major U.S.-based startup (80 percent of U.S. unicorns). 
  • Secfi has provided nearly $400 million in financing to help startup employees own their options, with more than $1.3 billion in secured capital readily available.
  • Secfi has doubled their team and opened a third office in New York, bringing in unmatched expertise in all areas of capital markets and equity planning, to help clients make the best decision. 

In short, this survey tells the story that we’ve been seeing firsthand at Secfi: Employees need help with their stock options. Our clients know they’ll get expert, one-on-one planning from our team of equity experts so they can make the best decision for their own personal situation. They know they can’t get that anywhere else, and we’re honored to build that trust with them. I’m excited about continuing to help the startup community with their equity planning.

Read the full survey here.

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Frederik Mijnhardt

Frederik Mijnhardt is CEO of Secfi and a member of the Board of Directors. Prior to Secfi, he was the Corporate Development Lead at Karhoo and was a Strategy Consultant for digital transformation projects for Accenture’s Global Strategy division. 

As founder of the UUBC start-up incubator, he was awarded the Google Internet Impact Award for groundbreaking research into the intersection of business and technology. He has deep expertise in start-ups, innovation, private equity, corporate strategy, business development, engineering, and product.

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