Secondary Share Pricing
When it comes to valuing their equity, public company employees have a lot more support than employees at private companies.
Most simply, public companies have a stock price. Think about all the analysts, industry experts, hedge funds, etc. that pore over the detailed data that a public company must disclose. All of that knowledge gets baked into a company’s stock price - it’s the market’s understanding of the future potential for a stock. Is it perfect? Not by a long shot, but it’s a lot better than most private company “indicators”. Employees can see if their company is getting hammered or soaring in the market, and get a much better read on their professional future (never mind the value of any stock awards).
Now, private companies will never release all the data that is required for public companies. But that doesn’t mean employees should be in the dark. Vested has sought to be a democratizing force - an asset for employees to better understand the murky “value” of private companies. When we launched, we offered a tool to allow employees to understand the equity “fairness” of their award. Thousands of employees have used this tool - further expanding our data set and allowing us to present even more accurate insight. Your usage is helping us improve, thus letting us help more employees.
But we want to do more. We want to help employees understand more than just their offer. And in aggregate, you employees know a lot. We’re assessing reams of data to provide greater context to a company’s momentum. Just by using Vested, you collectively contribute to greater transparency, and benefit from your peers’ contributions as well.
Perhaps the most important information you can know is your company’s share price.
While the price is not refreshed as frequently as a public company share, it can be updated more frequently than the price listed in your Carta or Shareworks account. Cap table management companies such as those are company tools - they track the capitalization table of the company. Sure, they tell you your strike price and the fair market value (FMV) of a share, but it’s well understood that FMV isn’t fair. How do you know what a share is worth? Easy - we work together.
For every company on our platform we use public data sets to understand the pricing of the last fundraising round. From that, we transform the price investors paid for a “preferred share” into a “common share”. Common shares trade at a discount to preferred, as preferred shares have greater rights and protections. This estimate of a common share, what we call a “Vestimate”, is our baseline value of a common share. However, since companies are always changing, the accuracy of our Vestimate fades with time. The Vestimate is a stake in the ground, a benchmark to help get in the right ballpark. We also provide two other prices to help you triangulate on what a “fair” price may be.
Every user of Vested can enter a sell price for their shares. You don’t need to be ready to sell today; you could put in a price that you hope your shares get to, a price that would compel you to sell, or a price that you think your shares are currently worth. It allows us to track sentiment and to show you the average price other shareholders have listed. Understanding the quantity and price of available shares allows you to not only understand how other potential sellers value their shares, but also how you should price your shares. Just left your role and have 90 days to use or lose your options? Maybe you price your shares on the low end of the supply curve. Under no pressure to sell and think your company is on a rocketship? Price high.
And finally, through our relationships with potential buyers of your shares, we will show you the price for any company that has active investor demand. This price provides insight into buy-side interest and how potential investors value a stake in your company.
Selling or not, these three different pricing points will help you triangulate on the value of your holdings. And that value is critical for understanding when to exercise, when to bounce, and of course, when to sell. When you start the sale process with us you get the benefit of independent advice and access to our network of buyers, making the process more simple - almost like Robinhood.
And selling is where we excel. We’re the only independent platform at scale that works just for the employee - never the company. We want you to sell if selling is right for you. We want you to hold your shares if that’s right for you. What we don’t want is unexercised “in the money” options that revert back to your company. It’s your compensation - capture it.