Equitybee is partnering with UI Charitable, a Donor-Advised Fund sponsor built for the way startup employees and founders actually hold wealth. The two companies solve different ends of the same problem. Equitybee helps you unlock the value of startup equity. UI Charitable helps you give from illiquid and private assets. This post is about the second one, and why it matters most in the year your equity pays off.
In March 2020 the world came to an economic and social standstill. Yet, despite this year-long deadlock that later rolled onto the present year, 2021 has been a record year for global venture capital funding. $288 billion was invested globally in startups in the first half of the year in comparison to the $300.5 billion invested in startups in 2020 [1].
There’s no coincidence that we’re seeing this growth following the COVID-19 pandemic [2]. New challenges mean new solutions, resulting in investment opportunities.
And while some industries have suffered, others have been able to innovate and triumph over the challenges presented to them, transforming their industries altogether— we see this occurring particularly in the healthcare and cybersecurity industries.
Issues that existed prior to the pandemic became painfully apparent. However, these challenges with cybersecurity, big data management, health insurance coverage, and telehealth brought forth new solutions that translated into plenty of venture funding and lucrative acquisitions.
For hospitals and other medical service providers to succeed in 2020, they needed to adapt to a rapidly changing remote environment.
This largely meant incorporating digital solutions provided by health-tech startups. These startups are combining different technologies like blockchain, IoT, AI, wearables, and big data analysis in innovative ways.
And their platforms are transforming the ways in which the healthcare industry operates. New technologies enable doctors to virtually follow up with patients via mobile or desktop applications.
Other innovations include portable, wearable monitors that provide physicians with real-time data for blood oxygenation and pressure. There also exists new tech to help detect the early stages of Alzheimer’s.
Venture Capital firms aren’t the only ones interested in the healthcare space. Large tech firms like Amazon and Apple are also looking to healthcare as the next growth frontier [3].
These firms have been making notable moves in the health care space through the acquisition of health-tech startups. These corporations are likely planning to revamp the entire healthcare system with their own unique branding and services.
Amazon, for instance, acquired startups like Pillpack and HealthCare Navigator. The company has since launched Amazon Care and received HIPAA compliance for the Echo [4].
The healthcare industry and its sectors are booming. Venture funding in the healthcare-related space reached $20.3B— exceeding 2020’s total year funding of $17B.
This makes the healthcare industry the second-largest venture-backed sector. Globally, the health market is forecasted to continue to grow to $240B by 2026 [5].
Aside from the logistical challenges remote work presents, the shift to a fully digital work environment also comes with digital threats.
Perhaps more so than any other industry, startups and corporations alike have become increasingly dependent on cybersecurity and data protection solutions.
And keeping company and employee data safe continues to be a top concern.
Government sectors have also invested heavily in end, network, and cloud security. As of August 2021, 45 states across the U.S. have introduced 250 bills dealing with cybersecurity [6].
These bills cover public, private, and government domains spanning issues related to infrastructure continuity, cybersecurity insurance, and cyber attack reporting.
The cybersecurity industry and its sectors doesn’t appear to be slowing down. Behind the scenes of our new digital norm exists an ongoing plethora of cybersecurity challenges— hackers, data leaks, phishing scams, misinformation, breaches, glitches, viruses, and ransomware attacks.
In fact, according to Cybersecurity Ventures, the cost of ransomware alone is forecasted to grow as high as $265 billion by 2031 [7].
Investing opportunities are not limited to VCs or large institutions. Accredited investors can also invest in the potential of these healthcare and cybersecurity startups.
And here at EquityBee, we want to make it easier for you to get in on this exciting action by utilizing our Wishlist feature.
The Wishlist feature allows you to add any startup companies you find interesting to your EquityBee wishlist. Simply add the startup of choice to your wishlist and you’ll be notified as soon as that company is added to our platform.
We encourage our community to use this feature and further, we encourage you to check out our blog to continue learning more about startup investing.
[1] https://news.crunchbase.com/news/global-vc-funding-h1-2021-monthly-recap/
[2] https://files.pitchbook.com/website/files/pdf/PitchBook_Q2_2020_
[3] https://www.opengrowth.com/article/why-apple-is-moving-into-the-healthcare
[4] https://www.cnbc.com/2021/03/17/amazon-is-expanding-amazon-care-telehealth-service-nationally-for-employees.html
[5] https://news.crunchbase.com/news/forecast-health-care-in-2021-will-focus-on-digitization-of-the-patient-experience/
[6] https://www.ncsl.org/research/telecommunications-and-information-technology/cybersecurity-legislation-2021.aspx
[7] https://www.zdnet.com/article/the-cost-of-ransomware-around-the-globe-to-go-beyond-265-billion-in-the-next-decade/
What a Donor-Advised Fund actually is
A Donor-Advised Fund is a charitable account held by a sponsoring 501(c)(3), in this case UI Charitable. Once you contribute assets, you no longer legally own them, which is what makes the deduction work. What you keep is advisory privilege. You advise how the funds are invested, when assets are sold, and which charities receive grants over time. The deduction happens in the year you contribute. The giving to actual charities happens on the timeline you advise, with no required distributions in any given year.
Stage two: this is where UI Charitable is different, and where it fits startup employees
Here is the part that matters for the way you specifically hold wealth.
UI Charitable allows you to donate long-term appreciated assets such as public stock, private stock, cryptocurrency, etc. to a Donor-Advised Fund, and receive a tax deduction equal to the fair market value of those assets. Startup employees are exactly the people whose appreciated wealth sits in private and illiquid form. UI Charitable can serve the asset class most of the giving world cannot.
One important boundary
To be clear about what does and does not apply. You cannot donate shares that are covered securities by the Equitybee agreement and received by using Equitybee stock option funding. You can, however, donate other appreciated assets to UI Charitable.
*This is not tax advice. Consult a qualified tax professional regarding your specific financial situation.
Case Study: A startup employee in California
How does it actually work? A side-by-side comparison of a startup employee in California.
This same example would work for any appreciated asset donated in-kind.
Startup employee in California
Salary: $350K • Private share value: $1M • Shares donated to a Donor-Advised Fund: $300K (30%)
Getting started
get started with UI Charitable by visiting https://www.uicharitable.org/equitybee
