This sponsored post is produced by SharesPost.
Investors seeking the high return potential of private growth companies have historically had to shoulder a significant degree of risk when adding private company shares to their portfolios. Now, by investing in the SharesPost Stock Option Loan Program, there’s a way for investors to access the equity upside of private growth companies with downside protection.
The SharesPost Stock Option Loan Program, offered by SharesPost Securities, lends option holders in select companies the capital necessary to immediately exercise their stock options. Borrowers benefit from securing long-term capital gains treatment on subsequent sales of their shares. In return for the loan, the borrower pays an interest rate and a percentage of the shares they are purchasing with the loan.
Investors participating in the program capture both interest income from the loans and exposure to the company’s equity appreciation. Investors enjoy downside protection because the loans are collateralized by the shares that result from the option exercise. At origination, the value of the shares serving as collateral represents a multiple of the loan amount, which provides a measure of protection to the loan principal even in the event of a sharp decline in the company’s value.
Lending against a company’s shares generally provides stable venture debt type yields, and the shares from the stock fee have the potential to significantly accelerate internal rates of return.
Investors can choose to participate in a single direct loan, or can invest in a diversified fund comprised of a series of loans to option holders at several different high-growth private companies.
Investors who would like more information can learn more at www.sharespost.com.