Frederik Mijnhardt, CEO, and co-founder, Wouter Witvoet, were both employees at a venture-backed company four years ago when they got the idea for Secfi after learning about stock options in a hard way.
“We started to leave the company, and my co-founder was hit with a 90-day exercise window,” Mijnhardt told Crunchbase News. “That is the first hit. The second hit is a massive tax bill that people don’t see coming. He had to sprint to find the best way, and he failed to find a solution in time.”
San Francisco-based Secfi works with startups and their employees to better manage equity compensation so they can make better decisions about if, when and how much it would cost to exercise their stock options in the event their companies went public. When employees wait to exercise, they increase costs as valuations increase — Mijnhardt estimates the average financing needed to exercise options is $600,000.
The company’s offerings include payout forecasting and tax modeling tools, as well as providing nonrecourse financing so that employees can exercise their stock options pre-IPO without paying anything until an IPO or other liquidity event, Mijnhardt said.
The new investment follows a $550 million facility by Serengeti launched in January 2020 and brings Secfi’s total facility investments to $700 million. Secfi raised an additional $7 million in seed and Series A in prior years, according to Crunchbase data.
“This has been a tremendous partnership for both of us,” said Jody LaNasa, managing partner and founder at Serengeti, in a written statement. “Through our relationship with Secfi, we’ve built a broad, diverse and growing portfolio of private companies. We’ve gained exposure to many of the fast-growing unicorns like DoorDash and Snowflake, all while providing liquidity to hundreds of employees that we believe are transforming the world.”
Due to 2020’s unprecedented number of IPOs, SPAC mergers and direct listings, Secfi saw increased demand and rapid growth, Mijnhardt said. Despite all of that movement, Secfi reported that year that an estimated $4.9 billion was left on the table by those who did not exercise their pre-IPO stock options.
After growing its customer base 300 percent over the last year, Secfi touts thousands of clients from companies, including Airbnb, DoorDash, Palantir and Snowflake, and has more than $10 billion worth of startup stock options registered on its platform.
As a result, all of the new funding will go toward exercising stock options and continuing to develop the core financing product.
“We expect 2021 to be a bigger year, and the money left on the table will be a multiple of that $4.9 billion,” Mijnhardt said. “We want to allow for people to have a choice, so we will be working with different providers so that we can be a one-stop shop for funding liquidity.”