Long employees of UBER are multi-millionaires, on paper. But with no sign of an IPO being imminent and a strict policy blocking most private share sales, they’re stuck in limbo land.
However, there’s a low key scheme available to UBER share holders who have worked there for at least four years, in that they can sell as much as 10 percent of their shares. A contact of mine at UBER told me (off the record) that the scheme has been designed as an incentive to encourage staff to not jump ship. The seller gets paid out over several months and must remain at UBER during that time, officially all UBER employees are not allowed to discuss the program externally. So my source asked to remain anonymous but told me that the scheme caps share sales at below $10 million per employee, with less than 200 of the 10,000 UBER employee shareholders currently qualify for the scheme. I was also told that this scheme is for GM/Country Manager level and above with those at that level having an average of $13m at current valuation, so in essence they will be getting around $1.3m in trickles, not exactly FU money in itself, but certainly a welcome injection of capital for the individual, who may invest it etc.
By working longterm in a startup, you are essentially embracing the scenario of short term pain for long term gain and often take pay cut, which you feel is mitigated by stock options or equity. However, UBER is quite unique in that because of the volume of capital they have raised an exit may still be years away, an IPO would require much work to improve the business pain points to create a positive prospectus that has the potential to achieve the market cap they need. I am not so sure that UBER will IPO before autonomous cars, but if they do, then it could still be years away, so you have an issue of employees who are very capable looking at other startups who have exits or even Google employees who have became seriously wealthy
With the exception of Snap (Who probably have no choice but to IPO) and a few others, tech companies are waiting much longer to IPO , and the huge funding available from private investors at favourable terms have made mergers a less attractive option. As a result, exits have been cut almost in half from their high in late 2015, according to the Bloomberg U.S. Startups Barometer, an index that tracks private markets.
The ride-hailing giant has raised more than $17 billion in cash and debt since its founding in 2009. It had more than $11 billion on its balance sheet as of June, the last time it disclosed the amount. But it’s spent aggressively since then, despite offloading its money pit in China to homegrown app Didi Chuxing.
Airbnb Inc. and Pinterest Inc. were founded around the same time as Uber, achieved valuations in excess of $10 billion and yet remain private. But the two companies have at times allowed their employees to sell shares to interested buyers and even facilitated some of those transactions. Uber, the world’s most valuable tech startup at $69 billion, has been more restrictive about who gets to buy its shares.
While Uber’s buyback approach can help it retain talent, it may also benefit the company’s bottom line. Using its own money, Uber purchases common stock for 25 percent to 35 percent less than the price of preferred shares from its most recent funding round, It can then turn around and sell shares at a premium in a subsequent round. Still, an employee who got their stock four years ago stands to make more than a 10-fold increase on the sale.
As some gold rushers watch their paper wealth soar, option holders face colossal tax bills on their stock, regardless of whether they can sell it. In late 2014, Uber began offering employees restricted stock units instead of options, which don't require paying taxes upfront, one of the people said. Employee demand to sell stock would be one factor that could ultimately motivate Uber to go public, but buybacks reduce some of the pressure.