How I sold my stock options
In this 2018 acquisition retrospective, @hannaysteve reflects on the journey of bootstrapping and successfully selling their business.
Core Principles for Independent Builders:
Unsolicited buyer inquiries versus running a deliberate auction process require very different negotiation leverage.
Bootstrapping for years without external capital provides extreme freedom, but exits are often triggered by energy depletion as much as financial gain.
Retaining ownership of code and operations creates pride, but transitioning to an acquirer requires letting go of absolute autonomy.
Community Debate Themes:
Hacker News peers debated transaction structures (cash vs earnout), founder tax strategies, and life after liquidating a long-term indie asset.
CATEGORY Startup Exits →
HISTORICAL ERA Cloud & Mobile Era (2014–2019)
COMMUNITY SCORE 102 points
TOTAL DISCUSSIONS 45 comments
Couple of thoughts as a founder and investor:
1) The company is disincentivized to help you sell your stock/options because it will create a new valuation of common stock. Companies use the lure of a low 409a to attract employees, especially savvy executives, with equity packages. Doing anything to set a higher future strike price is not in their interest.
2) Your NDA almost certainly prohibits you from communicating anything meaningful about the financial success and any future roadmap to possible investors. The company isn't required to open their books to a potential new purchaser and the limited data you can get via Delaware company shareholder rights almost certainly can't be communicated either.
3) It is illegal to market your shares to non-accredited investors.
4) Remember you are selling common, investors are almost always buying preferred with liquidation preferences and other rights attached. The valuation you can ever achieve is limited pre-exit (where all shares usually achieve the same valuation).
Things you can do:
1) The best time to sell like this is during the next round of fundraising. If you are on good terms with the company and probably have already left the company, you may be able to tack on your common shares in a sidenote to one of the investors.
2) Approach existing shareholders (including the founders) as they are best placed to buy your shares. Remember though they probably have board material access and will have more informational rights and access than you do. They will try to price down the shares below their true value.
3) Some specialist secondary VC firms exist who will either buy shares or offer you a personal warrant on the shares. You probably need to be holding $1MM+ of equity for this to be worthwhile.
Overall: this is really a firesale approach. If the company is doing well, existing investors will buy at a huge discount and if the company is not doing well/unclear you almost certainly won't be able to sell.
It's almost certainly never worth trying to sell pre-exit.
Were you able to sell your options, or exercise them and sell those shares ? If the latter, can you give us a hint how the price compared to the last round your company raised ?
What did you mean by "changing the attractiveness of the shares" ?
Maybe I missed it but there doesn't seem to be much info on the selling price. Did it sell on the valuation implied by the last funding round or was it lower to "solve the risk problem for the investors?".
don't many option plans say that shares are non transferable until a liquidity event unless company decides they should be transferable (ala what uber did recently).
Generic “obvious wisdom” type of article rather then specific actionable steps.
Apologies, but it leaves reader with the main question unanswered - how?