Forge works to help startup employees sell their vested shares so they can pursue their personal and financial goals.
As an employee at a fast-growing technology company, a large percentage of your compensation may be paid in equity, or stock in the company. Typically, you earn this stock over many years, and the amount may be refreshed throughout your career.
Today, the average startup stays private for 11 years before IPO. That means that it may be as long as 11 years before you can easily sell your shares through a traditional stock transaction.*
As a shareholder and an employee, you may want to convert some of that stock into cash to fund something else in your life, like a house. Or as a way to diversify your financial profile.
That’s where Forge comes in. Forge works to help you sell your shares so that you can use the money however you see fit.
Selling your shares is a four-step process.
It can be difficult to come up with the funds needed to exercise your vested, private company stock options, and Forge believes that option holders should have the ability to acquire and sell the equity they have earned. Forge Lending LLC offers employees an Options Exercise Bridge Loan that can provide you with the funds needed to exercise options and sell the resulting stock without incurring a significant upfront cash expense. Learn more here.
Unlike public companies, startups and private companies trade less frequently and are not required to make financial disclosures to the general public. As a result, private company stock prices do not update as frequently.
Forge has completed over 21,000 private market transactions in more than 500 private companies and has a proprietary platform of trading and valuation data that is used to help price your shares. In addition, Forge Private Market Specialists are experienced in facilitating private market transactions. They can share their market insight and bring together all available information to assist you in determining the value of your shares.
Generally, startups and private companies (sometimes referred to as “issuers”) are supportive of their shareholders selling shares so they have cash for family and personal needs. Private companies often have different procedures in place to manage stock transfers. Your Forge Private Market Specialist will help you navigate your interactions with the company and its preferred transaction process.
Our standard minimum transaction size is $100,000 USD; however, there may be opportunities to sell a smaller amount. Your Forge Private Market Specialist can discuss transaction sizes with you.
Forge supports multiple structures for private market investments and so fees vary. Typically, Forge’s commission is 5%. Participants may pay a higher commission if the total dollar amount of the transaction is less than our minimum transaction amount of $100,000.
On average, a transaction may take 50 days from the time Forge matches a buyer and a seller. Forge keeps you apprised of the timelines and next steps, every step along the way.
Buying shares of private companies can be challenging. You must be, at minimum, an “accredited investor” to purchase private company securities. The process can extend up to months from acceptance of your posted interest to closing of a transaction. This process includes the execution of certain legal agreements, notification to the issuer who can elect to exercise its Right of First Refusal or block a potential transaction, and coordinate with any other issuer transfer requirements.
Typically, to purchase unregistered securities (i.e., private company stock), you must be, at minimum, an “accredited investor”. These terms are defined under the securities laws for individuals and corporate entities that meet certain financial criteria. There is, however, no such accreditation requirement for those seeking to sell unregistered securities.
Unlike public companies, private companies are not generally required to make financial disclosures to shareholders or prospective investors. There is also no formal, central marketplace where pricing from prior trades is published. As a result, valuing private company shares can be difficult. Private market investors can, however, leverage Forge’s valuation data as well as our proprietary insights. In addition, your Forge Private Market Specialist is experienced in facilitating private market transactions. She or he can share their insight into the market and bring together all available information to assist you with your valuation assessment.
There is no legal requirement that you use a broker to invest in private companies. Many investors, however, find that using a broker and a private market platform like Forge provides advantages. These include a centralized pool of liquidity, experience with private company transfer processes, knowledge of applicable securities laws and transaction documents, and the expertise to bring these elements together in a successful transaction.
We believe you should select a firm with a proven track record and the resources to optimize your chances of a successful transaction. First and foremost, among these resources is an investment professional who is expert in private market secondary transactions. Other needed resources include a centralized pool of liquidity, relationships with private growth companies, private market data and content, and a strong legal, compliance, and operations team.
Our standard minimum transaction size is $100,000USD; however, we may allow you to buy or sell an amount less than the minimum, e.g., when an issuer allows smaller trade amounts or to receive a partial execution of a larger order.
Forge supports multiple structures for private market investments and so compensation arrangements vary. Typically, Forge’s commission is 5%. Participants may pay a higher commission if the total dollar amount of the transaction is less than our minimum transaction amount of $100,000.
Generally, private companies are supportive of their shareholders finding liquidity. They do, however, have different policies and processes in place. For example, almost all issuers impose a right of first refusal on secondary stock sales and require legal opinions. Your Forge Private Markets Specialist will help you navigate your interactions with the company and compliance with their preferred transaction process.
Forge Markets is a full-service broker dealer dedicated to the private growth equity asset class. Our clients and investment professionals leverage our proprietary insights, transaction data and information technology. We have facilitated more than 16,000 transactions in more than 400 private growth companies. Institutional investors know they can rely on Forge not just at the time of sale, but throughout the life of their investment.
Though the private market is becoming more transparent, it remains a market characterized by limited information. The availability of issuer financial and other diligence materials varies from issuer-to-issuer and transaction-to-transaction. Because of our strong working relationship with many issuers, we typically have access to more information than other private market participants. Wherever possible, Forge connects institutions and issuers under non-disclosure agreements to support disclosure.
Private market secondary liquidity has improved markedly over the past few years. As more and more private growth companies reach a size suitable for institutional investment, institutional capital has been migrating into the private market. Issuers have responded by raising larger private financing rounds and becoming increasingly supportive of shareholder liquidity. Still, when it comes to secondary transactions, investors should be aware that each private issuer has their own preferences, restrictions and processes and should consider their exit strategy prior to investing.
Forge supports multiple structures for private market investments and so compensation arrangements vary. Typically, Forge’s commission is 5%. Participants may pay a higher commission if the total dollar amount of the transaction is less than our minimum transaction amount of $100,000, and, where a special purpose vehicle is being employed, a management fee to the investors in the vehicle.
Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Forge Securities is a registered Broker-Dealer and Alternative Trading System with the U.S. Securities and Exchange Commission (SEC) and a member of FINRA/SIPC.
Forge works with each company to customize our services to meet their unique needs. Forge Company Solutions range from individual secondary transactions to the structuring and management of large, formal liquidity programs.
Forge requires that prospective buyers of shares execute non-disclosure agreements prior to engaging in detailed conversations regarding an investment opportunity. In addition, any financial information provided to us by a company is shared only with the consent of the company and on a need-to-know basis.
Forge’s legal and compliance teams have significant private market transactional experience. Forge transactions rely on frequently used exemptions from the registration requirements of the Securities Act of 1933, as amended.
Forge genuinely works with companies to understand their investor preferences and secondary policies and processes. Our Private Market Specialists, legal, and operations teams work together to establish company trust one transaction at a time. We are committed to delivering the highest quality execution and treating the company as a valued client.
Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Forge Securities is a registered Broker-Dealer and Alternative Trading System with the U.S. Securities and Exchange Commission (SEC) and a member of FINRA/SIPC.
Typically, Forge’s commission is 5%. Participants may pay a higher commission if the total dollar amount of the transaction is less than our minimum transaction amount of $100,000.
