EquityBee Secures $20 Million in Series A Funding

EquityBee, a startup operating a stock option marketplace, has successfully completed a $20 million Series A funding round.

Group 11 spearheaded the investment, with additional participation coming from Oren Zeev Ventures, Battery Ventures, and the ICON Continuity Fund. This latest financing brings the total capital raised by the company to over $28 million since its establishment in 2018.

Empowering Startup Employees

According to Oren Barzilai, CEO and co-founder of EquityBee, the core objective of the company is to enhance understanding among startup employees regarding the value of their stock options.

Furthermore, EquityBee aims to provide the necessary financial resources for employees to actually exercise those options. Barzilai noted a common scenario where individuals prioritize smaller salary increases while overlooking the potential benefits of their stock option packages due to a lack of knowledge.

He draws from his experience as the founder of Tapingo, which was acquired by Grubhub in 2018 for $150 million, observing that team members often miss out on company success by not exercising their options before leaving.

How EquityBee Functions

EquityBee offers capital to startup employees, enabling them to purchase their stock options. This funding covers both the exercise costs and associated taxes.

Investors providing this capital receive a return – a portion of the profits – in the event of a “liquidity event.” EquityBee generates revenue through an upfront fee charged to investors and carried interest earned upon a successful exit or initial public offering (IPO).

A critical aspect EquityBee addresses is the limited timeframe employees have to exercise their options, typically around 90 days after leaving a company. Often, even when aware of this deadline, employees lack the immediate funds required.

Expansion and Growth

Initially founded in Israel, EquityBee expanded to the U.S. market and relocated its headquarters to Silicon Valley in February 2020.

Since then, the company has provided funding to employees at numerous prominent companies, including Airbnb, Palantir, DoorDash, and Unity. Capital is sourced from family offices, funds, and high-net-worth individuals.

EquityBee’s investor network comprises over 8,000 funds, family offices, and high-net-worth individuals.

2020 proved to be a significant year for the company, with a growth rate exceeding 560% in the amount of capital raised for employee stock options. The number of employees funded through the platform also increased by 360%.

Future Plans

The company, currently employing 33 people, intends to allocate the new funding towards expanding its team and broadening its product offerings.

Dovi Frances, founding partner at Group 11, highlighted the firm’s increased investment in EquityBee, following an initial investment in February 2020. This decision was based on the company’s strong product-market fit and substantial growth.

Adam Neumann, co-founder of WeWork, previously led the company’s $1.5 million seed round in September 2018.