December 2020
An employee from Optimove approached Equitybee looking for funding to exercise their stock options. Their offer price was 37% lower than the last known common share price at the time.
Equitybee enables investors to participate in the success of a wide variety of pre-IPO companies, by funding employee stock options. Many of these startup companies are backed by some of the top venture capital funds in the world.
Equitybee’s unique model grants investors access to the most exciting companies in the startup ecosystem. Funding stock options allows you to share in the success of these companies, at an earlier, sometimes more favorable, entry price.
Equitybee allows investors to get access to pre-IPO startups by helping their employees exercise their stock options. This provides investors access to share prices from earlier in the startup lifecycle, which can be at a significant discount on the most recent preferred share price.The following graph illustrates the financial advantage for investors with Equitybee by looking at a hypothetical Series C startup.
Assumptions:
- Series C company where options were issued at Series A stage
- Series C valuation (preferred PPS) - $500M
- Total invested capital to date (pari passu) - $150M
- Strike price discount to latest preferred PPS (based on Series A 409A) - 67%
- Share incentive percentage - 31%
By funding the exercise of stock options at an earlier valuation, investors can potentially access an asymmetric risk/return profile. As the exit valuation begins to exceed the valuation at the point of funding, Equitybee investors can potentially receive higher returns for the same valuation.
At an exit valuation of $500M, an early investor would barely get their money back, but an Equitybee investor sees a 1.6x return. An exit valuation of $1B offers preferred investors a 2x return, whereas Equitybee investors would receive 2.6x.
Equitybee investors can generate a positive return sooner, even though they invest later than early stage investors if the offer price provides a deep enough discount.
In this model, the Equitybee investor will continue to outperform the preferred investor all the way up to an exit valuation of well over $7B (or >14x exit multiple).
This example shows the structural advantage of Equitybee's investment versus traditional venture investment.
Sources: PitchBook Data, Inc. for all index data, Equitybee proprietary data from 02/01/2020 - 1/4/2024. Past performance is not indicative of future results. Equitybee Cumulative ROI represents the aggregate of all realized capital returned to investors compared to the aggregate invested amount, net of fees.
Partial list. ROI calculation based on top ROI per investor per company. Past performance is not indicative of future results. Results may vary with each use and over time. Investor proceeds may be settled in cash or shares. These returns were primarily achieved during favorable market conditions.
The average internal rate of return provides a clear, standardized measure of investment performance over time. This metric normalizes returns, over the investment's time horizon, and expresses the compounded rate at which an investment grows annually.
Understanding and analyzing the internal rate of return empowers investors with the ability to make more educated and strategic investment decisions, enhancing their overall investment portfolio and potentially maximizing long-term wealth accumulation.
Since launching in 2018 until the end of November 2023, Equitybee’s investors have helped fund stock options in 113 companies that went on to experience a liquidity event. The average IRR across realized investments is 55%.
Net IRR by company represents fully realized investments, aggregated across offers by portfolio company. This performance data does not represent any investor’s portfolio or any model portfolio. IRR figures are calculated for each transaction into an offer on the Equitybee platform from the date the investor's funds were received through the distribution date of proceeds, if any, then aggregated by company. If the distribution date was less than one year after the invested date, the IRR represents an unannualized return. For distributions one year or more after invested date, IRR is annualized.
Equitybee offers investors access to the full gamut of startup industries including cybersecurity, AI, healthcare, fintech, and more. Each vertical has its own cyclical patterns with its own risk/return profile.
At Equitybee, we provide investors with visibility of past investments to help them make informed decisions about potential opportunities in pre-IPO companies.
In the time that Equitybee has made its offering available to employees and investors there has been a range of liquidity events that have triggered returns. This shows a healthy distribution in a fluctuating market with the full range of possible outcomes for a successful startup.
A unique type of liquidity event for Equitybee investors are tender offers, where the company or another investor offers to buy shares from current and past employees. These events have historically produced some of the highest performing returns for Equitybee investors.
*Past performance is not indicative of future results. 55.5% net IRR represents all fully realized investments across the Equitybee platform, including US and Israel markets. Investors should be aware that these returns were primarily achieved during favorable market conditions. The Israel market reflects offers from June 2018 through December 2023; the US market reflects offers from March 2020 through December 2023. Net IRR is shown net of all applicable fees for the respective market. This performance data does not represent any investor’s portfolio or any model portfolio. IRR figures are calculated for each transaction into an offer on the Equitybee platform from the date the investor's funds were received through the distribution date of proceeds, if any. If the distribution date was less than one year after the invested date, the IRR represents an unannualized return. For distributions one year or more after invested date, IRR is annualized. Data quoted excludes partial returns of invested capital, e.g., tender offers for a portion of covered securities, and investments which have not experienced a liquidity event. As of December 31, 2023, approximately $100 million has been invested on the Equitybee platform; 16.3% of invested capital has experienced a fully realized return, 83.6% of invested capital is unrealized or partially realized.
Equitybee takes proactive steps to mitigate counterparty risk. Equitybee reviews credit scores, past due payments, and screens for liens, criminal charges or convictions, and other potential red flags. Additionally, Equitybee verifies each employee’s options grants, including grant prices and vesting schedules.
** As of November 30, 2023.
To learn more about Equitybee’s unique offering for investors, sign up today to join the investor network and start learning about opportunities with some of the most exciting pre-IPO companies you can imagine.
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