I haven't personally, but I know people that have. The people that I know that sold shares used Equity Zen (https://equityzen.com/). The company I worked for has/had a "first right of refusal" option in the equity contracts, which basically means that when EquityZen offers you a deal, you have to bring the deal to your company and they can decide to buy your shares for the same price instead of letting you sell your shares to an outside party (which they might not want).

Not sure why this is Marked dead. Seems like a perfect question for this forum. I too would like to know the answer.

first submission by a new account, guessing from a throwaway behind tor so that the question can't be tied back to a specific person or company.

That's why it's useful for a handful of people to have showdead enabled: so that good questions or comments lost to antispam/antitroll filters can be fished out from the abyss.

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As for questions like "Were you able to sell w/o board approval," I feel like this depends on the terms of the agreement, no? I mean I'm keen on hearing the data for the sake of having a dataset, but the question itself doesn't seem to be immediately relevant unless the person answering the question happens to work at the same company as the person asking the question.

Thanks! Makes sense

We don't moderate HN that way. I know that contradicts the default cynical view, but people should replace that view with the following alternative cynical view, which is more accurate:

(1) HN's only value to YC is the community; (2) the community only comes here to the extent that it finds HN interesting; (3) therefore, to optimize HN's value, we have to optimize it for being interesting. Moderating for parochial interest (e.g. suppressing things that some $ingroup doesn't like—VCs or whoever else) would make HN less interesting, so we don't.

We also don't do it because (a) it would be wrong and (b) it would feel bad, but those concerns don't belong in a cynical argument. YC's business interests, however, do belong in such an argument, and it's very much in YC's business interest to keep this community as happy as possible. That's a sort of miracle if you think about it—a freak of economic nature—so we should all enjoy it for as long as possible.

Past explanations in case anyone wants more:

https://news.ycombinator.com/item?id=23284262

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

p.s. The OP was originally killed by a software filter—those are tuned more aggressively for new accounts. Fortunately other users vouched for the post, which unkilled it long before mods saw it. That's the vouching feature working as intended. See https://news.ycombinator.com/newsfaq.html#cvouch.

Hi dang ... I know this is meta but if you put this comment in a page linked at the bottom of HN, we can point confused users this text without wasting as much of your time. Of course, those that truly believe in conspiracy theories will either assume you're a disinformation source or in-the-dark regarding your bosses true motives. You can't really fight that.

As an aside, thanks ... to a large degree I enjoy this community because of the effort to keep the discussion civil (sometimes embracing debate over argument) and that I can learn at least a little about fields outside my own. It's much appreciated.

Yes, with SharesPost, equityzen and Forge. Company had a pretty standard policy so approval was straightforward but took a few months and required some legal opinions (costing $,$$$). In my case the deal was for the shares directly. Biggest lesson was really just that the fees really added up (near 10% if under $100k) and it’s a shame more companies don’t do more to broker these deals on employees behalf to get the best price and cut out the middlemen (another employer did this and it was great).

DM if I can help with more info, experience with each company was essentially the same and you should just reach out to all of them to see who has inbound buy requests at the highest price. Worth noting that there is more room for negotiation on price than you might expect.

Ah, interesting that your company had a standard policy for this. I wish mine did as well.

Worried about getting (or even asking for) board approval - what incentive would they have to allow an employee to reduce their stake in the companies success prior to an IPO event?

Owning shares in a pre-ipo company comes with it's own risks. And not wanting to be diluted from future investments is a valid reason to selling your shares.

It's possible for the company to dilute your shares turning them worthless, and then generates new shares. I'm sure there's lots of examples you can find of dilution, but that was what FB did to the former CFO as shown in the movie "The Social Network".

People keep talking about working for soulless companies when deciding to work for startups, but I can't think of a more soulless way to screw over your employees.

It's true that the company might dilute your shares, but that also dilutes everybody else's shares too.

The greatest risk is the company won't be successful and your shares will be worthless.

It happens. I've herd it referred to as a cram down +pull through. There are lots of ways to top people up after dilution.

Example: Cap table: Founder 10%, ex-employees 10%, VC 80%

Step 1) Company takes a down round, VC put some small money in, dilutes everyone 10:1.

Step 2) New stock plan with 10% for founder

Cap table: Founder 11%, ex-employees 1%, VC 88%

Step 3) Founder and VC high-five

See: The Social Network. I now refer to it as “Getting Eduardo’d”

Isn't that something the exemployee would be able to sue over? Like, it's clearly fraudulently done to steal their equity.

Yes, but you have to sue over it. For most people, it's probably not worth it. Besides, since it's a private company, equity is what the board/executives say it is.

> Besides, since it's a private company, equity is what the board/executives say it is.

Can you clarify that?

Maybe they meant valuation is what the board say it is

Dilution is extremely common and a lot of this funding stuff comes down to businesses strategy. My example was extreme, but there is tons of gray area for this kinda thing

Ah, if you were exaggerating the numbers to explain the concept, I can see how a more subtle screwing would be nonactionable. I thought you were saying they were that blatant

I think it certainly can be that significant or more. Someone else mentioned Facebook cofounder Eduardo Saverin. At IPO, Zuckerbergs's equity was down to 28% and Eduardo had been diluted down to 2%.

That is a co-founder of a high profile unicorn with continuous growth. Now imagine what can happen to employee # 1000 at a shady middle cap startup struggling to get to market.

I think you missed the point about issuing new shares. Everyone doesn't end up diluted in that case.

No DMs on HN.

Add your email address to the About Me section if you want to be reachable.

I sold once with Equityzen and once with a different company, I forget the name. Both times were great, but it took years from start to finish. They’ll help you through the process. The fees were levels below the taxes, not bad at all. If you are interested and your company is listed on secondary sites, why not list some shares and see if anything comes through.

I'll look into those!

My main concern is around requiring board approval. There isn't any formal policy for employees seeking liquidity, and I'm not sure the board will be receptive.

I mean, what incentive would they have to allow employees to sell their shares before an IPO/exit event?

The incentive is to keep the employee, who maybe wants a big box of money to buy a house, from going to work at a FAaaNnGg for a fat signing bonus.

>Were you able to sell?

yes, the company allowed people to sell up to 25% of vested shares if you were employed for more than 24 months

>What platform did you use?

Carta

> Were you able to sell w/o board approval? If so, were you able to use private forward contracts to complete a deal?

No

Anecdotally, this same line of thinking revealed the utter worthlessness of my ISOs upon leaving a company that is valued below a billion dollars and is not on a clear IPO trajectory.

I'm also curious if anyone has purchased secondary market shares and what that experience is like.

Bought uber, airbnb and reddit in 2018 on equidate/forgeglobal.

Structured as contracts for future stock from current employees that get transferred to you after the ipo (and usually 6 month lockup) are complete.

I got 100% of the uber stock (about 1x return) about 99.8% of the airbnb (about 2.5x return) and depending on if/when reddit ipos (was looking good for 10x a few months back but unlikely now) it will be interesting to see how much of the stock i get if it has gone up massively since initial purchase.

> it will be interesting to see how much of the stock i get if it has gone up massively since initial purchase.

You mean from the employees backing out somehow?

The employee got cash already. Not sure they can simply “back out” without major consequences.

I think its a somewhat unproven legal structure and i dont think it has been tested with really spectacularly performing stocks.

If you sold rights to your stock for a million 5 years ago and now it is worth 15 million and still in your possession, it would be tempting to sell it asap and move to brazil and let the lawyers come and find you.

Why is Reddit unlikely?

High beta growth stocks all pretty much nuked, ipo window closing etc

I used EquityZen a few times to sell shares and had a good experience with them. The main things I'd do differently are probably not hire a lawyer or at least find one I knew specialized in startups (I had the first deal with a lawyer and subsequent without and it just seemed to add friction without value, but who knows...I'm not a lawyer haha) and learn about Qualified Small Business Stock (QSBS) for tax purposes/talk to accountant that specialized in startups. The accountant I did talk to (recommended by my lawyer :-p) didn't mention this at all even though it did qualify.

The deals did need board approval, but it seemed like it was more to determine whether they wanted to exercise the right of first refusal (they did in the first deal and did not in subsequent), but maybe standard terms have changed since the rise of secondary market platforms. It was a bit nerve-wracking the first time since I didn't know what I was doing and I was most likely the first person to do it at the company, but it ended up working out fine (probably also worth noting I was no longer an employee at the time of the deals). Good luck!

I'm curious about this as well. Does your employer know that you sold or not?

They’ll have to, if you’re actually transferring ownership of the shares.

To transfer the stock directly you will need approval from the company/board.

I'm curious if anyone has done it without by using a private contract between buyer/seller (google: forward contracts).

Usually, they'll have to, since such stock is usually conditioned on you granting the employer the Right of First Refusal (i.e. the chance to beat any offer from a buyer you find).

ROFR devalues your ownership interest significantly in most deals.

Please look up right of first refusal before posting nonsense like that.

It means they have to match the offer or let you sell. It’s exactly like a national best bid guarantee in a real market.

No?

If you can find a buyer for a certain amount, you can sell for that amount. The company can just opt to be the buyer.

Check your stock agreement. I worked somewhere it didn't just grant first right of refusal, but the company had to _approve any sale_. In practice, they approved almost no sales, so this was a ban on selling shares before IPO.

This seems like an interesting dynamic because the company has to balance getting a random outside shareholder vs having to buy their own shares back for whatever price you negotiated.

Ownership is ownership. Your car isn't listed as a public company on the NYSE, but that doesn't mean your 1 share (worth 100%) in your car is fake.

You do not need a formal market for stock to be stock. A share of stock represents ownership. You are confusing that with publicly traded stock markets.

Check out exchange funds, or sometimes called swap funds. They are designed for this exact purpose.

I approached VCs that already invested into the company and they were willing to buy from me.

How about startup advisors? Or others who have received slivers of equity?