Extended exercise

You get equity when you join a startup. In order for that equity to become real cash, three things must happen.

You vest the equity (ie you stay at the company long enough)

You exercise the equity (ie you purchase the options and they become stock)

Your company exits (M&A, IPO, however you like)

‌

But that middle step around exercising is complicated. What happens if you leave the company to take another job?

Well, what usually happens is a countdown clock begins. You typically only have 90 days to decide if you want to exercise that equity - and exercising can be quite costly!

So it's pretty cool to watch the percentage of startup employees who have longer than 90 days to make this choice climb over the years. Now usually this stat rises when layoffs rise (founders in that situation tend to want to give the laid-off employees more time to decide, which is nice if a little too little).

But even after high layoff periods, the percentage tends to be higher than it was before.

I firmly believe startup employees deserve more than 90 days to make this financial decision. Kudos to the founders out there who are at the front of this wave.

Onwards!

Subscribe here if you're new to the Data Minute. Forwarding encouraged!

Peter Walker

Carta Insights