The Elephant helps Private high-tech company shareholders understand the value of their holdings and their liquidity options. When it’s time to sell, The Elephant helps shareholders discreetly find the right buyer and close their sale.
Research and Insights
The Elephant partners with Zirra to use their AI and analysis network to help private high-tech company shareholders understand the value of their holdings and their liquidity options and online portfolio management tools.
Private Securities Specialists
The Elephant Private Securities Specialists provide the experience, expertise and service shareholders need to transact with confidence.
Connect with the right buyer from among thousands of The Elephant’s investor clients.
The Elephant’s strong issuer relationships and operations team enable best-in-class trade execution.
Register with The Elephant
Complete our brief questionnaire so that we can understand your private market objectives.
Value your holdings
Register your private market holdings so that you can receive relevant news and research and value your holdings.
Work with your private securities specialist
Your Private Securities Specialist will be your guide to the The Elephant Platform, answering questions and assisting you with stock sales.
Select a buyer
When you decide to sell, your Private Securities Specialist can help you select the right buyer from our network of thousands of investors.
Close Your Sale
Your Private Securities Specialist will provide assistance with respect to documents and other assistance you may need to close your sale smoothly.
The Elephant’s Objective is to Offer Securities That Meet All of the Following Preconditions:
The securities are those of a high-tech private company.
The securities’ owner has held them for at least 12 months and there is no principle limitation upon selling them.
The company has raised funds in at least two rounds of financing with a total investment amount of not less than $50,000,000.
Since we provide a meeting place for high quality companies as well as leading private equity investors, a minimum of US$100,000 worth of shares per transaction is required. Of course, larger transactions are also possible.
The first transaction gives the investor the opportunity to “test the waters” and check the quality of the company, its management and products, etc. If the investors are satisfied, they may be interested in purchasing additional shares from the seller.
The Elephant partners with Zirra to use their AI and analysis network to help Private high-tech company shareholders understand the value of their holdings and their liquidity options and online portfolio management tools.
What’s the Easiest Way to Liquidate Private High-tech Shares on the Secondary Market
Introduction: The longer Route to Exit (Companies Remain Private for Longer Periods of Time)
In the past, it seemed that the road to travel before startup companies achieved success and made an exit was quite short. Companies made their way to high-value IPOs or were sold to international corporations, for exorbitant prices, in a very short period of time. In many cases, success came overnight.
In recent years all this has changed. Nowadays, the capital market expects to see more stable and profitable companies, which greatly extend the IPO exit cycle. Companies also wait longer before deciding whether to complement their product portfolio or expand it through mergers and acquisitions. They also want to develop more complete, stable and profitable products that will compete in the market and lead it.
What this means for the startup employee of today is that they live in a riskier environment and the wait, until they see any returns from their shares and options, just gets longer and longer.
Do you have stock options? Well, now you can sell them without having to wait!
Every employee who received options through a company stock-option plan and which are vested, now has the opportunity to exercise and sell them. Many of these options are neglected or even forgotten as time passes or after an employee leaves the company and the options expire. This is where The Elephant steps in to provide help and guidance in converting options to stocks and then selling them effortlessly through our system to either the company or investors seeking a stake in the company.
The Alternative: Employees Can See Financial Benefit Prior to an Exit (Turning the Exit Event to a Continuance Process)
The demand in recent years for private company shares, especially the most prominent ones, has created a new market with an unprecedented opportunity for company founders, employees and former employees of startup companies. New platforms have been established that serve as a meeting point between demand (private and institutional investors and VCs hungry for investments with the potential for significant returns and supply (company founders, suppliers, employees and former employees).
The result, is an opportunity for an early exit or early partial exit for employees of privately held start-ups on the one hand, and on the other hand, access to sought-after securities with potentially significant returns for the investors – a classic win-win situation.
Companies such as Facebook, LinkedIn, Twitter as well as some of the other hottest startups in the last decade set the stage by enabling their employees to sell shares on the secondary market.
Nobody Wins Unless Everybody Wins
Why is the deal good for investors? Everyone understands the significance of the hike in value before an IPO: whoever goes in first, comes out with the most.
Why is it a good deal for employees and those involved in the company? This is also clear. Selling on the secondary market greatly reduces the risks for the sellers, and enables them to diversify their portfolio, which previously depended solely on their options and shares.
An aspect of particular interest, with reference the company whose shares change hands, is that in addition to receiving an injection of cash (in the event of an options exercise), it also reduces the stress and concerns of the employees (who benefit from some of the proceeds of the exit in advance, at no cost to the company). It also refreshes the list of corporate investors, which quite often opens the door to new contacts and relationships with new resources that can be beneficial in the long run.
You Do Not Have to Sell Everything
The classic dilemma for shareholders whose stock value is on the rise is whether to sell now and reap the profits or wait a while longer in the hope of realizing additional gains. Most experts will advise you to sell part of the stocks now and hold on to the other part in the hope that they will increase in value over time. This way you realize immediate gains, hedge the risk that the stock will go down, and enable yourself to enjoy future returns should the stock continue to go up.
This is precisely the situation with startup employees debating whether to sell now on the secondary market or to wait for the exit to sell. Do you take your profits now before the company has reached its peak, or get caught in the “big blow-out.”
The problem is that the “big blow-out” is unpredictable. Even companies who appear to be on their way to eternal glory suddenly fail and never realize their potential. In these cases, options that are worth millions of dollars shrink by dozens of percentage points, and the dream of the grand exit shrivels and turns into mere small change.
The sale of a portion of the shares on the secondary market provides a solution for both sides of the equation: the fear of missing out on the return at the exit and the fear of losing value in case the company fails. The sale enables the sellers to receive cash right there and then, which can often make the difference between, for example, living in a rented apartment or owning your own home.
And yes, you should always have stocks on hand, in the event of a future exit. This way you can truly get the best of both worlds.
To Exercise or Not to Exercise, that is the Question!
Many employees, especially former employees and former suppliers of startup companies whose options are about to expire, wonder whether they should exercise their options or not. What will it cost to exercise their options? Will they be able to afford it? Is it at all worthwhile? Who knows, perhaps the said company which, in many cases they are no longer involved with, is really a dead horse and their options are not worth anything?
The Elephant Platform, which enables you to sell your stocks, will provide you with all the information you need.
What We Do
First and foremost, we are here to find you a buyer. Buyers normally come to us because they know what our platform has to offer. They are generally interested in shares of startups that are on their way to an exit, in much the same way that you have come to us to examine the possibility of exercising your options on the secondary market. We are here to make the connection and create a meeting point that will enable both sides to realize the deal they are looking for.
In addition, our role is to coordinate referrals of potential buyers who are interested in your securities. Our team of professional and skilled staff has vast experience in assisting with, as well as the implementation of deals. We will provide backup and support throughout the entire process, starting with the initial inquiry, and all the way through to the final stage when the proceeds of the sale reach your bank account.
You are Not Alone
We have developed a series of models that make it easy for employees and companies to implement sales transactions on the secondary market. Amongst these models, we propose a collaboration between the company and its employees, so the sale becomes a service provided by the company to its employees. We also offer a pricing tool that will allow not only for a significant profit for the employees, but also create interest in the securities being offered among investors.
This enables companies to control the price and the timing of the sales of their shares, and in doing so to prevent an excess supply of the company’s stock, which would most definitely lead to a drop in the stock price.
The Elephant’s main function to prevent this possibility. At the same time, the company can also verify the identity of the investors, and determine whether they are suitable as new shareholders in the company, or perhaps pose a risk and are therefore deemed as undesirable.
In any event, we strongly suggest the involvement of the company in the sales process, in order to ensure that the interests of the company and the employee, and those of all the other employees, are aligned.
Conclusion: Reach a Private Exit and Continue to Strive for a Public One
In summary, the secondary market for shares owned by company founders, employees, former employees, suppliers and former suppliers of startups offers these shareholders the best of both worlds. On the one hand it enables them to reach their own private exit by exercising some of the shares in their possession (or all of the shares if they so desire), while on the other hand giving them the opportunity to continue to benefit from the increase in the value of the company, assuming they retain some of their holdings. In addition, it protects them from the risk of the company’s failure and loss of value.
But most of all, the ability to liquidate shares of private companies in the secondary markets enables the shareholders of outstanding companies to “have their cake and eat it”. They can have their own private exit and continue to link their future with that of the company they love. Thus, not only do they benefit personally but also continue to support the company they are loyal to and in which they have invested so many years of work, so that it will continue to thrive and in doing so, increase the value of their holdings.
Frequently Asked Questions
How do I sell shares in a private high-tech company?
Selling shares of private high-tech companies can be challenging. To complete a transaction, you must find a buyer, negotiate the price, execute legal agreements and process the transaction with the company. Applicable securities laws must also be understood and adhered to. The Elephant helps buyers and sellers execute each of these steps.
Do I need a broker to help with my sale?
No – there is certainly no legal requirement that you use a broker to sell private high-tech company shares. Many sellers, however, find that leveraging a broker and a private market platform like The Elephant provides several advantages. These include a large network of potential buyers, 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.
Will the issuer of my shares permit my sale?
Generally private companies are supportive of their shareholders finding liquidity. They do, however, have a number of valid concerns regarding such stock sales. These include sensitivity to disclosure of financial information; the impact secondary sales may have on their option pricing and/or valuation of the company and compliance with securities laws. Each issuer has different policies and processes in place to address these concerns. For example, almost all issuers impose a right of first refusal on secondary stock sales and some may also require legal opinions. Your The Elephant’s Private Securities Specialist will help you navigate through your relationship with the company and compliance with their preferred transaction process.