On: Silicon Valley's best kept secret: Founder liquidi...

[nine_k]

This is when you immediately liquidate your stock position, instead of taking a loan using it as a collateral, which would likely cost you 10%-15% in interest, not 30%.

[andrewmutz → nine_k]

No, in this example the person sold equity in order to get the 500K. They can't use the equity as collateral for the loan because they dont own it anymore

[kelnos → andrewmutz]

I think it'd be pretty rare for a bank to accept equity in a series A startup as collateral for a loan.

[andrewmutz → kelnos]

And even if it did, it wouldn't really derisk much for the founder, which was the original purpose of taking money off the table.

[nine_k → andrewmutz]

Yes. They should not have if they were to optimize taxes.

[tyre → nine_k]

But then they’re paying interest and very few startups are going to have stock that a someone will lend against. I cannot imagine someone taking Series A stock as collateral for a loan.

[rKarpinski → nine_k]

Not sure why you are getting downvoted. There are multiple ways of structuring what is effectively selling the shares early that are not tax disadvantaged.