Secfi snags $150m investment facility for building its stock option financing platform

Pre-wealth management platform Secfi secured a second investment facility from Serengeti Asset Management for $150m. 

The development comes after Serengeti’s first $550m facility in January 2020 bringing Secfi’s total facility investments to $700m. Secfi raised an additional $7m in seed and Series A in prior years.

With the new funds, Secfi will be able to educate and assist more employees in optimizing the value of their stock options before exit. The new funding will also go toward exercising stock options and continuing to develop the core financing product.

San Francisco-based Secfi works with startups and their employees to better manage equity compensation so they can make better decisions with details on the cost of exercising their stock options in the event their companies went public. When employees wait to exercise, they increase costs as valuations increase. The firm estimates the average financing needed to exercise options is $600,000.

The company’s offerings include payout forecasting and tax modelling tools as well as providing nonrecourse financing so that employees can exercise their stock options pre-IPO without paying anything until an IPO or other liquidity event.

The company works with employees from 80% of all US-based unicorn technology companies and has over $10bn in stock options registered on its platform. Claiming to have grown its customer base 300% over the last year, Secfi touts thousands of clients from companies, including Airbnb, DoorDash, Palantir and Snowflake.

The firm’s growth has been driven by the unprecedented number of IPOs, SPAC mergers and direct listings. Secfi reported that an estimated $4.9bn was left on the table by those who did not exercise their pre-IPO stock options in 2020.

Commenting on the funding, Serengeti founder Jody LaNasa said, “This has been a tremendous partnership for both of us. Through our relationship with Secfi, we’ve built a broad, diverse and growing portfolio of private companies. We’ve gained exposure to many of the fast-growing unicorns like DoorDash and Snowflake, all while providing liquidity to hundreds of employees that we believe are transforming the world.”

Secfi CEO Frederik Mijnhardt believes 2021 will be a bigger year and the money left on the table will be a multiple of that $4.9bn. He said, “This new capital is earmarked for very late-stage private companies on the path to exit. While exercising early is the ideal situation, we have seen a 5x surge of late-stage employees coming to Secfi to explore financing options before IPO and decided to expand our pool of capital to better meet their needs and accelerated timelines.”

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