The Employee Stock Option (ESO) Fund has officially closed its debut fund which will deploy up to USD25m to provide funding for current and departing employees of venture-backed companies to exercise their stock options.
Departing employees of venture-backed companies are often faced with the dilemma of either exercising their stock options immediately or letting the options expire worthless.
The ESO Fund reduces the risk of exercising options by lending money through non-recourse loans that have no payments on principal or interest until a liquidity event is reached. The ESO Fund provides these individuals a simple mechanism to claim their equity while preserving their personal capital.
The ESO Fund is founded by venture industry veterans Stephen Roberts, Jimmy Lackie, and Scott Chou. The fund concept was inspired by their own personal experiences serving on the executive boards of many startups where they observed that a significant number of departing employees were not exercising options.
"We estimate that each year employees of private companies forfeit approximately USD500m in future earnings in the form of stock options that are not exercised. We can help anyone from the receptionist up to the CEO capture some of that value without them having to take a lot of risk," says Stephen Roberts (pictured), ESO Fund managing general partner. "The ESO Fund provides a critical and previously unmet public service for employees."
