Last October, OpenAI authorized its employees to sell a stock package valued at $6.6 billion. About 75 workers received nearly $30 million each, and more than 600 people participated in the transaction. Some current and former employees chose to donate part of their shares to charitable organizations to take advantage of tax deductions, while others sold everything to external investors.
The impact of liquidity on the tech startup ecosystem 🚀
This type of operation allows employees of tech startups to obtain liquidity without an initial public offering. OpenAI, valued at over $80 billion, thus enables its team to diversify income. From a technical standpoint, the sale structure was based on agreements with external investors who purchased secondary shares. This avoids diluting the company's capital and keeps control in the hands of the founders. The strategy is common in high-growth firms.
Donating shares to pay less taxes: the master move 💡
Some employees discovered that donating shares to charitable organizations not only helps noble causes but also reduces the tax bill. Indeed, altruism and the wallet can go hand in hand. While some buy a yacht with their $30 million, others settle for a deduction and a clear conscience. In the end, everyone wins: investors, employees, and the tax authorities, who collect a little less. Ironies of tech capitalism.