Stock option financing can feel overwhelming, with different players in the space offering various solutions. Some provide traditional loans, others act as marketplaces, and then there’s Secfi - which works a little differently.
We’ve noticed that many people aren’t fully aware of how our business model works, which may lead to confusion or frustration. That’s why we wanted to shed some light on how Secfi operates, how we make money, how we carefully review companies, and, most importantly, what this means for you.
TL;DR: We’re not just another financing provider - we are also an investor.
Where does the money come from?
Secfi raises capital from institutional investors who believe in the potential of private tech companies. These investors provide the funds that in turn allow us to offer you non-recourse financing.
What Secfi does: we’re an investor, not a marketplace
Secfi helps tech employees unlock the value of/exercise their stock options without taking on personal financial risk. Unlike traditional financing providers that offer structured loans or marketplaces that simply connect you with lenders and/or investors, we are an investor ourselves.
We carefully underwrite each company we work with, meaning we conduct a thorough evaluation of both your company and your equity. This helps us offer the best possible terms for you ensuring fair and competitive pricing.
How is our process different from others
Because we invest our own capital and take financial risk, we do thorough due diligence before making funding decisions. This is different from other players like:
- Traditional financing providers: which require personal guarantees and fixed repayment schedules
- Marketplaces: which match applicants with third-party investors or lenders on a deal by deal basis.
We offer non-recourse financing, meaning your personal assets are not at risk since the funding is only tied to the value of your share.
Does it mean you can lose your shares?
Nope. You retain ownership of your shares. However, in case of an exit event (e.g., goes public or is acquired), we receive a portion of the proceeds based on our agreement.
This structure allows us to provide funding without putting your assets on the line, but it also means we must carefully assess both your situation and the company behind your shares before making a decision.
How do we make money?
We make money through fees associated with our services, but our model is different from traditional financial options and to make this model viable, we charge:
- Platform fee: which is a fixed 5%
- Advance rate: which grows over time and is added to the total repayment amount, think of it as similar to an interest rate but without required regular payments
- Equity share: which is a percentage of the your share’s value at exit
Aligning incentives: how we win together
Our goal is to provide financing that benefits both you and us. We provide capital so you can exercise your shares, save on taxes, and keep ownership of your equity, ultimately giving you more control over your financial future.
Since our return is directly tied to your success, we only win when you do. Our approach is built on shared upside and aligned interests.
What does this mean for you?
If you’re looking for the fastest possible cash, other financing providers like a traditional loan or a home equity line of credit may be quicker but often come with personal financial risk.
Our thorough approach not only ensures a fair and well-structured solution but also provides downside protection, safeguarding your personal finances for long-term success.