Equitybee runs a marketplace where accredited investors put up the cash to exercise a startup employee's stock options, in exchange for a cut of whatever those shares turn out to be worth. The employee's problem is what makes the marketplace possible: exercising costs money now, the strike price plus a possible tax bill, and the shares it buys can't be sold.
An Investor Covers the Exercise Cost, the Employee Gives Up Part of the Upside
A stock option isn't a share. It's a contract giving an employee the right to become a shareholder later, and at a private company "later" usually means a liquidity event: an acquisition, a merger, or an IPO. Until one of those happens, the shares have no market and no price a buyer will pay.
Equitybee sits inside that waiting period. An accredited investor funds the employee's exercise cost. If a liquidity event arrives, the employee repays the original funding amount plus interest, along with a portion of the stock value, either in cash or in shares. If the company never gets there, the employee owes nothing.
That last condition shapes everything else. The employee gives up part of a possible windfall and carries no repayment obligation. The investor absorbs the entire downside in exchange for the option-like upside.
Investors Pay 5% Up Front and 5% of Profits; Employees Pay Nothing
The pricing is easy to read, which isn't always true in private markets.
| Accredited investors | Startup employees | |
|---|---|---|
| Up front | 5% investment fee | $0 funding fees |
| After a liquidity event | 5% of profits | Interest plus a share portion to the investor |
The employee's cost shows up somewhere other than a fee line: in the slice of future equity value and the interest written into the agreement.
The $10,000 Minimum Rules Out Small Positions
Equitybee requires a minimum investment of $10,000 to fund a stock option. With the 5% entry fee on top, that's a steep floor for a single illiquid position in one private company. Diversifying means committing multiples of that minimum, so a portfolio built on this platform gets expensive fast compared with buying a fund.
The SEC's Accredited Investor Requirements
Only accredited investors can fund options through the platform. The qualifications come from the U.S. Securities and Exchange Commission, and meeting any one of them is enough:
- Annual income above $200,000 in each of the past two years, with the expectation of the same in the current year
- Net worth over $1 million, excluding the value of a primary residence
- Proof of certain professional credentials, such as a FINRA Series 7, 65, or 82 license
Employees seeking funding don't need to be accredited. They connect with the investor network for free.
Investors Fund the Options but Never Own the Shares
Title to the option, and to any stock it eventually converts into, stays with the employee at every stage, a liquidity event included. What you hold is a contract with the employee.
That puts a second risk on top of the startup's odds: whether one individual honors an agreement. Equitybee says it would pursue legal action against an employee who breaches the contract without returning the original investment or the agreed share portion. Enforcement is a process, though, not a guarantee of recovery.
No Secondary Market Means No Exit Before a Liquidity Event
Equitybee has no secondary market, so there's no way out ahead of a liquidity event. If the company keeps operating privately for years, profitable and growing with no IPO in sight, the invested cash sits frozen.
Picture funding options at a company that raises another private round and stays independent for a decade. Nothing has gone wrong. Nothing has gone right either, and the capital is still committed.
An Estimated 90% of Startups Fail
Equitybee itself points to the estimate that 90% of startups fail. When one does, the investor's money is gone and the employee has no obligation to return it.
Investors can browse hundreds of opportunities across industries including financial services, health care, cybersecurity, robotics, and biotech, and can build a wishlist of the company types they want to see. Those are discovery tools rather than risk filters. The underlying failure rate applies to the pipeline as a whole.
Private Companies Disclose Far Less Than Listed Ones
Private companies don't file the quarterly disclosures that listed companies do. Financial details, customer concentration, and burn rate are often unavailable to outside investors, and the last known valuation may come from a funding round that no longer reflects the business.
The same information gap explains why employees end up needing platforms like this. Many grants give departing employees only a limited window to exercise, and exercising private shares can trigger a tax bill on paper gains that can't be sold to pay it.
Founded in 2018, With 840-Plus Companies and $235 Million in Transactions
Equitybee was founded in 2018 in Tel Aviv, Israel, by childhood friends Oren Barzilai, Oded Golan, and Mody Radashkovich, after they watched friends miss out on stock options when their employers were acquired. The company is now based in Palo Alto, California.
By the numbers the company reports: more than 2,600 shareholders, a portfolio of over 840 companies, and more than $235 million in total transactions facilitated. It says it has helped more than 1,700 startup employees exercise their options.
Companies on the platform that have gone through successful liquidation events include Unity, Airbnb, Affirm, Coursera, Payoneer, 23andMe, and Compass. Those are outcomes from the platform's history, not a forecast for anything currently listed.
Support runs through an online contact form and an office phone line at 650-847-1149.
EquityZen and AngelList Venture Sell a Different Instrument
Both alternatives serve accredited investors, but what an investor ends up holding isn't the same:
- EquityZen connects employees who want to liquidate private shares they already hold with accredited investors, and offers funds built around a single company as well as funds holding several.
- AngelList Venture links angel investors with startup founders raising capital, giving investors equity in the companies they help fund.
Those platforms generally involve equity or fund interests. Equitybee's product is a contract tied to an employee's option grant.
What the Investor Ends Up Holding: A Contract, Not a Share
The agreement an investor signs is with an employee, not with the company whose shares are at stake. Ownership of the option, and of any shares it becomes, stays on the employee's side straight through a liquidity event. The investor's claim is the repayment plus interest and the agreed share portion, and collecting it depends on the employee following through, or on Equitybee going to court if they don't.
Nothing about that claim can be sold or repriced while the company stays private, and if the company folds, the claim goes with it. So the 5% up front and 5% of profits buy a position whose value turns on two things outside the investor's reach: whether a liquidity event ever arrives, and whether one person honors a contract once it does. The employee side of the marketplace is simpler to describe. Free funding, no repayment if the company fails.
