Weekly Update #194: Who Owns Private Tech Shares?

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Hello Investors,

Who Owns Private Tech Shares?

 

Investors on EquityZen's platform often ask us who the selling shareholder is. While we do not divulge the seller's exact information, here are some of the more common selling shareholder types:

  • Current Employee: Current employees are issued stock options with a vesting schedule attached. Once those employees hit certain holding periods, they may exercise those stock options, which converts the options into stock. From there, some employees seek to monetize a portion of their shares.
  • Former Employee: A similar case to the current employee, except the shareholder no longer works at the company.
  • Early-Stage Investor: an angel investor, seed investor, or even a Series A venture capital investor that received shares in connection with a primary capital raise.
  • Late-Stage Investor: an institutional investor that may have participated in a capital raise in the past 2-3 years, and seeks to realize any value appreciation in that short time. These include Hedge Funds, Growth Equity Funds, Mutual Funds, Family Offices.
  • Founder of an Acquired Company: A founder of a company that gets acquired by a large pre-IPO technology company may have been compensated in the form of private shares of the acquiring company.
  • Advisor: Directors and advisors that have provided advice and guidance to the company in exchange for equity.
  • Lawyers + Service Providers: In lieu of cash payment, law firms and other service providers may have accepted payment in the form of equity. This is more common at the early stages of a company's life, when the company may not even have any cash to speak of!

In other news...

 

Thanks,
Phil Haslett
Founder + Head of Investments, EquityZen

 

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