Final yr set a brand new file for public exits, with greater than 844 U.S. corporations going public through an preliminary public providing (IPO), a direct itemizing, or by a particular function acquisition firm (SPAC). That’s 105% larger than 2020, which noticed 410 comparable corporations go public, based on PitchBook.
The 20 largest U.S. IPOs generated an estimated $41 billion in pre-tax worth for workers who held inventory choices in these corporations.
Report public exit exercise is sweet information for founders and buyers, however what in regards to the workers who had been granted inventory choices in these corporations?
We dove into our proprietary knowledge in addition to publicly obtainable knowledge filed with the U.S. Securities and Change Fee to uncover defining developments for workers from late-stage unicorns in 2021.
Right here’s an summary of what we discovered:
Workers may have paid much less in taxes by exercising their inventory choices earlier than their firm went public.
- In 2021, startup workers paid an estimated $11 billion in avoidable taxes by exercising their inventory choices post-exit, quite than pre-exit.
- On common, Secfi shoppers paid $543,254 in 2021 to train their pre-exit inventory choices (roughly double their annual family earnings), with taxes accounting for 73% of the associated fee.
- Workers at corporations that went public in 2021 saved almost $415,000, on common, by exercising earlier than an IPO.
- Pre-exit inventory possibility train charges differ broadly from firm to firm, from as little as 2.4% on the low finish to greater than 77% on the excessive finish, which may symbolize a sign of worker confidence of their firm.
$11 billion in pointless taxes paid in 2021
In 2021, workers working at VC-backed U.S. startups that went public paid an estimated $11 billion in additional taxes as a result of they waited to train their inventory choices post-exit, per a Secfi estimate of 172 U.S.-based, VC-backed public exits.
Workers may have paid much less in taxes by exercising their inventory choices earlier than their firm went public. Doing so may have additionally maximized their positive aspects when promoting their shares. In 2021, excessive inventory possibility train prices remained a significant barrier to folks exercising their inventory choices early.