A Bolt engineer borrowed $100k to exercise his options, then he got laid off

As a founder who has gone from seed to IPO we have never intentionally employed this strategy for non executive hires.

We also allowed liquidity at each funding round.

A lot of the reason the system is setup how it is is due to IRS tax rules that make it very hard to give equity at the later stages of a company. If you just give shares then the employees will have a tax bill day one on an illiquid security.

Workarounds are complicated, and things like this are the result. I think Bolt’s issues are more due to arrogance than malice.

This is why, when you’re looking at job offers, cash in the bank now is ALWAYS better than anything else they can offer.

And with RSUs, at least they are real stocks in a trading account that you can immediately sell and cash out when they vest. Options on the other hand are the worst. Consider them to be worthless.

I'm a founder. I agree, it's a scam. The constraint I bump up against is that VCs expect standard terms which means that stock options will be granted with tight post-exit expiry schedules. The best we've managed to do is to give people the right to 83b election. The whole structure creates such an adverse situation for employees - forcing people who are usually not in a position to take risk (like this guy) into a risk position and a taxable event.

If anyone has good workarounds for seed-Series B level companies, I'd love to hear.

n people blaming n-1 people

Only borrow what you can repay.

This case is really only another example of "read and understand the terms before signing."

If you have 90 days to pay the loan off when you leave the company for any reasons then you must have this scenario covered.

$100k in options seems like a lot, I guess.

At some point the secondary market value becomes $0 for common shares due to the preference stack, which in Bolt’s case is probably over a billion. So if the market views Bolt at less than a billion common is worth nothing.