Startup employees often receive stock options as part of their compensation. To convert these options into shares, employees must exercise their right to purchase these stock options, which involves significant upfront capital. Many employees cannot afford to do this, missing out on participating in the potential future success of the companies.
Equitybee’s investors can provide the needed capital, allowing employees to exercise their options. In return, investors receive their initial investment, annual interest, and a percentage of the equity's value upon a successful liquidity event, such as an IPO or acquisition. This creates a mutually beneficial opportunity in a largely untapped market worth over $150 billion*.
In 2022 and 2023, Equitybee facilitated the funding of three offers for Klaviyo stock options, to cover the exercise cost.
A few months after the last offer was invested, Klaviyo successfully exited with an IPO in September 2023, delivering positive returns to the investors who funded the stock options.
Below showcases Equitybee’s ability to turn investment opportunities into realized gains:
The table summarizes the investment outcomes for three Klaviyo employee offers, showcasing successful returns for investors. Here are some highlights:
These results highlight the effectiveness of Equitybee’s platform in providing access to pre-IPO opportunities, allowing investors to achieve substantial returns by supporting employees in exercising their stock options.
* TAM is calculated based on the estimated number of startup employees (1.1M) in the companies that qualify for the Venture Portfolio Fund’s Investment Criteria, This number is derived from Pitchbook, multiplied by the average employee offer size sourced from Equitybee’s proprietary data.** Internal Rate of Return, net of fees*** Multiple on Invested CapitalPast performance is not indicative of future results. Private placements are speculative, illiquid, contain substantial risk and may result in the complete loss of capital to the investor. Consult your tax accountant as there may be tax considerations on profit amounts. Results may vary with each use and over time. Investor proceeds may be settled in cash or shares. See Important Information slides for more disclosure information.
The timeline of events for the Klaviyo employee offers funded through Equitybee begins on December 28, 2022, when Offer #1 was funded. Offer #2 saw partial funding on January 5, 2023, and was fully funded by March 24, 2023. This was followed by the full funding of Offer #3 on May 3, 2023. Klaviyo's significant milestone came on September 21, 2023, with its initial public offering (IPO) at $30 per share, closing the day at $33.72 per share.
The settlement trigger date was set for February 29, 2024, following the expiration of the IPO lockup period. Between February 29 and March 6, 2024, the volume weighted average price (VWAP) was calculated at $26.4972 per share. Consequently, cash distributions to investors occurred on March 20, 2024. This timeline illustrates the key funding events, Klaviyo's IPO, and the subsequent financial outcomes for investors.
Offer #1 Funded
On December 28, 2022, the first Klaviyo employee offer was funded through Equitybee. This offer, known as Offer #1, was funded at an offer price of $10.8096. Investors provided the necessary capital to cover the exercise costs for the employee who held stock options in Klaviyo. The investment terms included a 20% share incentive, meaning investors would receive 20% of the shares value at the time of settlement.
Additionally, the investment carried a 2% annual interest rate, accruing on the principal amount until the liquidity event. The successful funding of Offer #1 set the stage for subsequent offers and demonstrated the potential of Equitybee’s platform in facilitating investments in pre-IPO companies.
Offer #2 Partially Funded
On January 5, 2023, Klaviyo Offer #2, received partial funding through Equitybee. This partial funding was executed at an offer price of $6.7585 per share. The terms for this offer included a 25% share incentive and a 2% annual interest rate.
This partial funding marked the beginning of the investment process for Offer #2, providing essential capital to the Klaviyo employee to start exercising the stock options, with the anticipation of full funding in the near future.
Offer #2 Fully Funded
On March 24, 2023, Offer #2 was fully funded at an offer price of $6.7585 per share, with a 25% share incentive and a 2% annual interest rate. This completion provided the necessary capital, finalizing the investment terms set in January.
Offer #3 Fully Funded
On May 3, 2023, Offer #3 was fully funded at an offer price of $6.9148 per share, including a 35% share incentive and a 2% annual interest rate.
Klaviyo Initial Public Offering
On September 21, 2023, Klaviyo went public with an initial offering price of $30 per share. By the end of its first trading day, Klaviyo's share price closed at $33.72 per share, marking a successful IPO. A six-month lockup period followed the IPO, during which insiders, including employees, were restricted from selling their shares. This lockup period delayed the realization of gains for early investors and employees until its expiration.
IPO Lock Up Period Over
On February 29, 2024, the six-month lockup period following Klaviyo's IPO ended, allowing insiders, including employees, to sell their shares. This date also served as the trigger for settling investments made into Klaviyo employee offers via Equitybee.
5-Day Volume Weighted Average Price Calculated (trading days)
Between February 29 and March 6, 2024, the Volume Weighted Average Price (VWAP) of Klaviyo’s shares was calculated over a 5-day trading period. The VWAP was determined to be $26.4972 per share. This price reflects the average volume weighted price at which shares were traded, during this period, and it served as the basis for the settlement calculations for investors who funded the Klaviyo employee offers through Equitybee.
Distribution to Investors
On March 20, 2024, distributions to investors who funded the Klaviyo employee offers through Equitybee were made. Although Klaviyo's share price was $26.37 per share on this date, the settlements were made in cash at the previously calculated VWAP of $26.4972 per share. This distribution marked the realization of returns for the investors.
Offer #1, yielded a 42% ROI and a 33% IRR. Offer #2, achieved an 87% ROI and a 78% IRR. Offer #3, resulted in a 118% ROI and a 118% IRR. The ROI and IRR for Offer #3 are the same because the realized return was achieved in less than one year. These returns illustrate the successful execution and profitability of the investments made through Equitybee.
Had an investor purchased Klaviyo shares at the IPO price of $30 per share and sold the shares at closing price on the distribution date, the investor would have realized a negative 12% return. This highlights the effective timing and advantageous terms secured through Equitybee, enabling positive returns even amid subsequent market fluctuations.
Klaviyo public share prices sourced through Yahoo! Finance. Equitybee is not affiliated or associated with, or endorsed by, any of the companies mentioned herein. Equitybee executes private financing contracts (PFCs), private placements which are speculative, illiquid, contain substantial risk and may result in the complete loss of capital to the investor. These risks may be greater during extreme market conditions. PFCs do not grant or transfer ownership of startup company stock. When a liquidity event occurs at a price per share less than the investment price per share, Investors will first receive all available funds to recoup the original investment amount. The employee will not receive any proceeds in this event. A private offering of interests will only be made pursuant to a confidential private placement memorandum, an operating agreement, and other subscription documents (“Other Documents”), which will only be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. For accredited investors only. Securities offered through EquityBee Securities, LLC, member FINRA.