Carta Employee Stock Option Financing Program

Henry Ward
5 min readSep 16, 2021


Below is an excerpt from a presentation we made to our Board on our Stock Option Financing program. I know a lot of CFOs and Chief People Officers at late stage companies wrestle with how to help their employees borrow money to exercise stock or buy homes. I hope this helps.


We partnered with Quid, First Republic Bank, and Better to develop three types of stock option financings and are excited to now offer this as a turn key solution to Carta Customers. Here is what we did for Carta employees:

Non-Recourse Financing to Exercise Stock Options w/ Quid

We offered Carta employees non-recourse financing starting from $40K to $2M for employees to exercise shares. The employee’s stock is used as collateral and the employee gives up a small portion of the upside to receive the financing amount. There is no upfront out-of-pocket cost and employees are not personally liable for the financing if the stock underperforms. We had 18 employees borrow $9M under this program.

Recourse Loan to Exercise Stock w/ First Republic Bank

We also offered Carta employees a recourse loan between $60K — $1M for employees to exercise shares. In this case the employee personally guarantees the loan in case the stock underperforms. But there is no upside participation and the interest fees are much lower than a non-recourse loan. We had 15 employees borrow $6M under this loan program.

Home Loan Using Carta Stock w/

Lastly, we partnered with to offer Carta employees the opportunity to finance their homes using Carta stock. These mortgages had two unique components.

First, an employee could include the vesting schedule of their stock as part of their debt-to-income ratio calculation. For example, if an employee earns $150K/year in salary, but vests $300K/year in stock, they could include both together and qualify as having a higher income and more borrowing ability.

Second, an employee could pledge their Carta stock as additional collateral for a mortgage rather than having to make a large down payment. For example, if an employee is buying a $3M home and would typically need $600K cash down, they could instead pledge $1.2M in Carta stock (50% advance rate) as additional collateral and receive a full $3M mortgage, eliminating the cash down payment. Importantly, the employee retains the ownership, and upside, of their stock, while being able to own a home. This is amazing.

Carta Board Presentation

Below is an excerpt from our Board presentation explaining the three loan programs in more detail. If you are at a startup worth more than $500M+ and want to roll out a similar program for your employees, please shoot me an email at We’d love to help.

The cost to exercise a stock option for a Carta employee has increased ~600% in the last 3 years, driven by the growth in our 409A value. We recently rolled out Liquid RSUs to solve this problem for new employees, however our existing employees continue to struggle to come up with the cash to exercise their option grants.

When we started looking around for a solution, we found that existing stock option financing solutions are broken, both for employees and companies.

So, we decided to fix it, and come up with a solution that optimizes for both employees and companies. Our solution was to create a specialized financing program for Carta employees and we are excited to now offer early access to this program for select Carta customers.

As part of this new offering, employees get access to three different financing options, lower minimum funding sizes, access to a tax and financial advisor, and pre-negotiated terms and legal documents. We’ve found that our solution helps employees feel more confident in entering into a financing agreement, because of the support we provide them during the process.

For companies, we provide full visibility into which shares are pledged, standardized terms for all employees, and a seamless process where Carta bears the administrative burden of implementing and running this program.

We had a total of 33 current and former employees borrow an aggregate sum of $15M against their Carta stock over the course of Q2. Employees used this cash either for general liquidity or to become owners in Carta by exercising their options — they locked in a lower tax bill, started the clock on long term capital gains and became eligible to participate in our liquidity events. We also have five Carta employees buying homes using their Carta stock instead of a cash down payment.

We’ve all heard stories of employees that worked hard only to realize they could not take advantage of the value they created. Somewhere around 80% of all granted options are never exercised. We are trying to fix that, and create more owners.