The latest generation to learn about “Irrational Exuberance” the hard way. That last paragraph I pasted makes me wonder how many buy now/pay later firms, Robinhood’s, Scam Coin trade platforms, exercise equipment manufactures, ride-share companies, delivery companies, etc., will be with us 3 years from now?
New York Times/Seattle Times headline: Loans could burn startup workers in downturn
July 22, 2022 at 10:07 pm Updated July 22, 2022 at 10:08 pm
SAN FRANCISCO — Last year, Bolt Financial, a payments startup, began a new program for its employees. They owned stock options in the company, some worth millions of dollars on paper, but could not touch that money until Bolt sold or went public. So Bolt began providing them with loans — some reaching hundreds of thousands of dollars — against the value of their stock.
In May, Bolt laid off 200 workers. That set off a 90-day period for those who had taken out the loans to pay the money back. The company tried to help them figure out options for repayment, said a person with knowledge of the situation who spoke anonymously because the person was not authorized to speak publicly.
Bolt’s program was the most extreme example of a burgeoning ecosystem of loans for workers at privately held tech startups. In recent years, companies such as Quid and Secfi have sprung up to offer loans or other forms of financing to startup employees, using the value of their private company shares as a sort of collateral. These providers estimate that startup employees around the world hold at least $1 trillion in equity to lend against.