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.
Today, we’re highlighting the success story of a startup employee who was able to exercise their stock options with the help of Equitybee. For the sake of privacy, this individual’s personal information has been anonymized.
This individual reached out to us when they left their senior position in Research and Development at Radiflow, a cybersecurity company focused on operational technology.
With a package totaling nearly 300,000 stock options, this employee needed more than $70,000 to exercise them. For reference, that same amount of money could be used to purchase a new, fully loaded, self-driving Model 3 Tesla!
As they described it to us, “I always knew I would need to pay money to exercise the stock options, but I knew I didn’t have the required funds, and the risk of taking a loan in order to exercise was not an option.”
When this employee first came to Equitybee, they had numerous questions about the exercise process and about our platform.
“I didn’t know what my obligation was to the process or to the investor,” they said, “but the entire process with Equitybee was so easy and so professional that I didn’t need to search for alternative solutions.”
We worked with this employee, side by side, until we came up with the funds they needed. Through our investor network, they received over $70,000, enabling them to exercise their options without spending a penny of their own money.
While this startup employee’s company is yet to go public or be acquired, they are still very grateful for Equitybee’s support.
“I love Equitybee,” they said. “I recommend it to anyone I know, and I was so pleased with the process that I pushed four other engineers to work with Equitybee.”
With the support of the Equitybee team and our investor network, this startup employee was able to own shares in the company they helped build, all without taking any money out of their own pocket.
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
