this post was submitted on 23 Feb 2024
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Is there an equivalent of the sell-to-cover withholding strategy for stocks that aren’t publicly tradable?
I don't see why you couldnt, but you'd need a buyer. Like if you had a funding round you might include in part of your use of proceeds a small buyback/ sell to cover like you're talking about. If the company was doing the sell to coverthats definitely easier cash wise than a bonus but not 0.
All these rules make total sense, they're just hard for really early companies. The lawyer calls alone on this stuff start to add up in a hurry and if you skip them you may have just screwed the people you want to help and muddied things for any future raise.