In 2021 Startup Employees Paid $11 Billion in Unnecessary Taxes

Secfi, the leading equity planning platform helping startup employees navigate financial decisions from offer to IPO, today published their annual State of Stock Options Report. Since 2017, Secfi has been the startup community’s leading equity advocate, and has worked with employees from 80% of all U.S. unicorns including Airbnb, Coinbase, and Doordash, helping them understand, maximize, plan, and provide cash to unlock the value of their own stock options. More than 20,000 startup employees have used Secfi’s platform for equity planning, representing $25 billion in equity.

2021 set a new record with more than 844 U.S. companies going public via IPO, SPAC, or direct listing, a 105% increase from 2020 which saw 410 companies go public.

Secfi’s second annual State of Stock Options Report analyzes how startup employees managed their personal stock options in 2021. Key findings include:

• In 2021, startup employees paid an estimated $11 billion in avoidable taxes by exercising their stock options post-IPO, rather than pre-IPO
• On average, Secfi clients paid $543,254 to exercise their pre-IPO stock options (roughly double their annual household income), with taxes accounting for 73 percent of the cost
• Employees at companies that went public in 2021 saved nearly $415,000, on average, by exercising before an IPO
• Pre-IPO stock option exercise rates vary widely from company to company, from as little as 2.4 percent on the low end, to more than 77 percent on the high end, which could indicate employee confidence in their company

“2021 saw a record number of IPOs in the U.S., generating tens of billions of dollars in wealth for startup employees but due to the high cost to exercise, many were forced to pay unnecessary taxes by waiting until after the IPO,” said Secfi CEO Frederik Mijnhardt. “And that only represents those employees that were able to financially benefit from their company going public. There are still many more employees that don’t enjoy the success of an IPO because they lost their options, typically when leaving the company, due to affordability. Founders and executive teams need to recognize the value it adds to their company for employees to have the knowledge and ability to exercise their stock options. Equity compensation itself is only the first step, that’s why many leading startups are actively providing educational resources so employees understand their equity.”

To read the full report visit: https://www.secfi.com/learn/2021-state-of-stock-options

Secfi provides non-recourse financing solutions to startup employees who want to exercise their stock options or unlock liquidity from their shares, enabling them to optimize the value of their equity and build wealth for the future.

About Secfi

Secfi is trusted by thousands of startup employees for equity planning and financing. We’re the first to provide a proprietary suite of equity planning tools, 1:1 guidance with licensed equity strategists, and a set of financing products that enable employees to own a stake in the company they helped build. We also provide company-wide education for startups at all stages to help their team make the best decision for their own situation. Currently, we have worked with employees from more than 80% of all U.S. unicorns. For more information, please visit www.secfi.com.

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