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The Israeli innovation authority deems the sector suffers from ‘ chronic employee shortage’ The battle for talent has meant that companies had to lure potential employees with billboards, influencer videos, referral schemes, etc. I commented on this to Israel21c in the early days of the tre nd.
Common exit strategies include being acquired by another company, the sale of equity, or a management or employee buyout. Management buyout: If you’ve built a business whose legacy you want to see continued long after you’re gone, you may want to consider turning to your employees. Who needs an exit strategy?
Most founders stick around for their lock-upperiod (1-2 years) before going on to found their next company. And wants to structure a huge payout for the employees that will remain. I know many rank-and-file employees. et al really have to keep up with the Jones’s to build its future? Does Yahoo!
Many of those newly minted millionaires go on to invest in startups themselves, which fuels the ecosystem and makes them role models for the next generation of startup employees that are hoping for a big payday from their options. That’s great for the startups because option holders are often happy to work for lower salaries.
The impact of these new unicorns and especially th e graduated unicorns which provide liquidity to both investors and employees (after lockupperiods), have meant that potentially thousands of employees have become millionaires.
Practically speaking this doesn’t mean that all of the shares owned by founders, investors, employees (RSUs), or others will be available to trade immediately as they will need to be converted and registered for public trading. But it does mean that traditional 180 day lock-upperiods won’t generally apply to existing Slack shareholders.
The next two years could be epic for tech IPOs and the Bay Area specifically — the combined market caps of the pipeline, even taken with a discount, total in the hundreds of billions, with many of the key shareholders (as investors and employees) residing in the Bay Area.
Practically speaking this doesn’t mean that all of the shares owned by founders, investors, employees (RSUs), or others will be available to trade immediately as they will need to be converted and registered for public trading. But it does mean that traditional 180 day lock-upperiods won’t generally apply to existing Slack shareholders.
Don Dodge wrote about a very dry but critically important issue facing private companies that issue equity to employees… 409A valuations : IPO bump? – If private investors have already bid up the valuation, will there be an IPO jump in the stock price? Good deal for employees and a good deal for investors.
The result is more startups, more money and firms to fund it, and an increasing belief that access to technology-related equity (either as a founder, employee, or investor) must become increasingly democratized or rebalanced as a result of the compounding effects at scale we are now witnessing. 3/ The Streaming Media Effect.
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