An estimated $200-300 billion in employee stock options are abandoned annually because employees lack the capital to exercise them. Vested addresses this market failure by providing financing, turning illiquid paper wealth into a tangible asset for employees and creating a unique investment opportunity for its funds.
Vested employs a quantitative model to select and price private company shares, moving beyond traditional relationship-based venture investing. The model uses differentiated data, such as key employee flow events (e.g., first CFO hire), to systematically identify startups with the highest potential for success.
Instead of relying on inbound interest, Vested actively identifies employees leaving target companies using data from platforms like LinkedIn. They then proactively reach out with a solution to the acute financial problem of exercising options within a tight window, resulting in a highly efficient and proprietary deal sourcing engine.
Vested mitigates the key counterparty risk of non-delivery by focusing on smaller deal sizes and structuring transactions to fund the option exercise itself. This ensures the employee has a significant remaining stake in the outcome, aligning incentives and leading to a 100% delivery rate across more than 60 liquidity events.
The conversation positions Vested's strategy within the broader trend of private markets becoming more structured and indexable, akin to the evolution of public markets decades ago. By building a diversified portfolio based on quantitative signals, Vested is creating a data asset that could be foundational for future private market index products.
Keep pulling the thread on Dave Thornton.