Secfi

Think your company will IPO in 2025? 🙋♂️ Now is a great time to start making a plan for your equity. ✅ One theme that is consistent across almost everyone I speak with... ⤵ "What can I do to pay less taxes?" One of the best ways to mitigate your tax exposure is by proactively having a plan. A plan for: ▪ How & when will you exercise options? ▪ How much should you elect to withhold for taxes on your RSUs? ▪ Which grants or tax lots of shares will you sell post-lock-up period? Among advisors, there is a saying of "never let a tax year go to waste". Since we are quickly approaching the end of the year, if you plan to take action in 2024, now is the time to get your ducks & row. 🦆 For individuals who hold unexercised ISOs, you have the ability to exercise *some* ISOs this year without paying taxes. If your exercise price is lower than your company's current Fair Market Value, it could be beneficial to understand how many options you can exercise this year without incurring tax. For folks who want to minimize their tax exposure upon an IPO, then getting exercised in advance is the way to position yourself for lower taxes upon an eventual sale. Exercising stock options does not come without risks. 📣 It's important to understand what these risks are, what your all-in costs will be, when you will need to make tax payments, and ultimately how these decisions affect your overall financial situation. If you are trying to navigate year-end equity decisions, send me a message or checkout the equity planning tools on the Secfi platform. Not only does an equity plan position you to save on taxes, it also can provide peace of mind that you're not making a decision that could have unintended consequences.

Hot Take! The Fed DOES NOT control interest rates 📈 . They only control one interest rate, the fed funds rate. I believe they have some influence on other rates, but that influence is limited and decreases the more the rate differs from fed funds in its characteristics. Most interest rates have actually INCREASED since the Fed cut in September (see chart). If your heuristic is “the Fed controls the market”, you’re wrong… A lot of people who hear “the Fed is cutting rates” are going to be rudely surprised by mostly higher interest rates 😠. Investors who positioned themselves for lower rates by extending duration have seen the opposite happen. I believe the Fed is one player in an enormous global market 🌎. They are a big player, but just one of many, they cannot control rates outside of the one they explicitly set. The market cares about everything that matters, not just the Fed’s policy for one short-term rate. The Fed understands this and tells us as much ALL THE TIME. They will not give clear direction to us about what they’re going to do because they DON’T KNOW. They are reacting, not controlling. But humans love to imagine somebody is actually in control 🧙♂️. I believe the reality is that it’s a complex system of cause and effect with nobody explicitly or exclusively “in charge”. Past performance is not indicative of future results.

📢 Join Secfi’s Capital Markets & Investments Team! Are you a rockstar with Investment Banking or Private Equity experience? We're offering a unique opportunity to work in a fund within a startup, raising capital and investing in pre-IPO Tech companies. Apply now or share with someone who fits the profile! #Hiring #InvestmentBanking #PrivateEquity #FinTech #CapitalMarkets #TechInvesting #PreIPO #StartupJobs #Secfi #VentureCapital #FinanceCareers

We’re thrilled to announce that John Morrison, CFA, Head of Portfolio Management at Secfi, is presenting at Pegafund's upcoming webinar! Join “Fundraise and Exit: Data, AI, and Growth in 2025+” to gain insights on navigating the rapidly evolving landscape shaped by big data, machine learning, and AI. Learn how reflecting on the past and planning for future scenarios can help you prepare now for the opportunities and challenges ahead. 🗓️ Date: Wednesday, October 2nd, 2024 ⏰ Time: 10 am EST  🔗 Register here: https://lnkd.in/ewJbw3PN

Why should startup professionals care about tax law? 🤔 If you've been granted Incentive Stock Options (ISOs), the tax policy that is set to go into effect starting in 2026 greatly impacts your situation. Let's take a look at what I mean. ⤵ Using tax planning software that I help to model exercise scenarios for clients, I compared two scenarios below. For an apples-to-apples comparison, I used the same variables in each scenario. ▪ Household Income: $400,000 ▪ Filing Status: Married Filing Jointly ▪ Taking the Standard Deduction ▪ Exercising 10,000 ISOs at a $0.75 Strike Price & $10 / share Fair Market Value. (10,000 * 10 - 0.75 = $92,500 "bargain element" for these ISOs) I compared current tax policy (Scenario 1 - 2024) and future tax policy (Scenario 2 - 2026). As you'll notice, assuming the same inputs, in Scenario 2, the projected Alternative Minimum Tax is over $10k higher! 🤯 This is due to a variety of factors with the new tax policy, such as a lower annual AMT exemption & lower phase-out income levels. In plain english - if you hold ISOs with a strike price below your company's Fair Market Value (409a valuation), the taxes associated with exercising your options are likely to become higher, starting in 2026. This also affects one's ability to recover AMT credits going forward, if you have previously paid AMT in prior tax years. Tax policy can certainly change between now & 2026. Also, just because tax law may be changing, I encourage everyone to still understand the risks involved with exercising stock options. As I've shared before, everyone has the ability to exercise some ISOs each calendar year tax-free. I believe a multi-year exercise plan can help mitigate your tax exposure & limit the risks involved. If you're seeking guidance on exercising stock options & what it means for your personal financial situation, I'd love to chat with you! 😊