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Illustration: Sarah Grillo/Axios

Silicon Valley may end up with large numbers of abandoned employee equity, as startups cut jobs amid the coronavirus-caused economic uncertainty.

Why it matters: Startup employees typically have just 90 days from the end of employment to either exercise their stock options, for which they must pay cash, or to let them go.

Driving the news: A number of companies, such as SoftBank-backed Compass, travel lodging company Sonder, and business travel company TripActions, announced layoffs in recent days.

"Paying up front out of pocket, it’s a significant amount that people just don’t have in cash," says EquityBee CEO Oren Barzilai, whose company helps finance employee stock option purchases.

  • EquityBee and Secfi, which also offers financing for employee stock options, both report a recent uptick in startup employees signing up for their services.

Between the lines: What makes these decisions tricky for newly laid-off employees is the combination of the common 90-day exercise window and the volatile economic outlook.

  • Some companies have extended these windows (e.g., Compass employees will have 12 months), but 90 days remains the industry standard.
  • According to Carta, only about 11% of startup employees have exercise windows longer than 90 days, up from about 3% in 2010. And while employees exercise more options when they can do it early, only about 15% of options can be excercised early.

The bottom line: Some workers not only are losing their jobs, but they're likely to lose part of what they earned over the past several years.

Go deeper

Moderna says vaccine appears to protect against new COVID-19 variants

Photo: Justin Tallis/AFP via Getty Images

Moderna's COVID-19 vaccine is effective against new variants of the virus that first appeared in the U.K. and in South Africa, the company announced on Monday.

Yes, but: The vaccine was as effective against the strain from U.K., but saw a six-fold reduction in antibodies against the South Africa variant. Even still, the neutralizing antibodies generated by the vaccine "remain above levels that are expected to be protective," according to the company.

Dave Lawler, author of World
Updated 1 hour ago - World

Xi Jinping warns against "new cold war" in Davos speech

Chinese President Xi Jinping. Photo: Wang Zhao - Pool/Getty Images

Chinese President Xi Jinping warned that a "new cold war" could turn hot, and must be avoided, in a speech on Monday at World Economic Forum’s virtual “Davos Agenda” conference.

Why it matters: Xi didn't refer directly to U.S.-China tensions, but the subtext was clear. These were his first remarks to an international audience since the inauguration of President Biden, whose administration has already concurred with Donald Trump's determination that China is committing "genocide" against Uyghur Muslims, and issued a warning about China's aggression toward Taiwan.

Updated 2 hours ago - Politics & Policy

Dominion files $1.3 billion defamation lawsuit against Rudy Giuliani

Photo: Rey Del Rio/Getty Images

Dominion Voting Systems filed a defamation lawsuit against Rudy Giuliani on Monday seeking $1.3 billion in damages for his "demonstrably false” allegations about the company's voting machines.

Why it matters: Giuliani led former President Trump's efforts to overturn the results of the election and spread the baseless conspiracy theory that Dominion's voting machines flipped votes from Trump to Joe Biden.

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