Twitter IPO

More Startups Help Workers Cash Out Before IPO

Startup employees with an equity stake generally can’t cash out until the company goes public or is bought out. But a growing number of workers want the cash now – and more companies are offering them a way to get it.

Aiming for a valuation of $5 billion, payment startup Square is raising money that would allow the company to buy employee shares, and companies including SpaceX, Evernote, SurveyMonkey and WordPress creator Automattic have been helping employees sell their stock as well, according to The Information.

The startup EquityZen launched earlier this year specifically to help employees sell their shares. It has attracted nearly $12 million in equity shares that employees want to sell. The company matches equity-holding employees with investors who want to buy their stake.

On the online private-equity exchange SecondMarket, employee sellers accounted for more than half (59.8 percent) of private stock sales during the first half of 2012, up from just 11.1 percent in all of 2011.

Facebook, in 2009, offered employees the opportunity to sell up to $1 million worth of company stock or 25 percent of their vested shares and was overwhelmed with the number who wanted to do so. Its rocky IPO didn’t instill confidence that employees should wait, Bloomberg notes.

The news service quoted SecondMarket spokesman Aishwarya Iyer as saying that allowing employees to cash out without leaving the company can be a good retention strategy. “It’s a great way to say thank you to your employees,” she said. ”It’s a morale booster.”

About Susan Hall

Susan Hall is an accomplished writer and editor living in Louisville, Ky., where they like horses – a lot. Susan boasts some affection for horses, but more for dogs. She has written on a broad range topics from Olympic marathoners to the use of Twitter in the corporate jungle. Born of the print era, she worked at metro dailies such as The Dallas Times Herald, Seattle Post-Intelligencer, Seattle Times and USA Today. The latter two even still exist. She fled the ink domain and became a member of the launch team. From there it’s been a giddy ride of project management, research, interviewing, writing and editing in the IT realm. When not working, she and her Cocker Spaniel, Charlie, compete in AKC agility events.