Deal Terms
Employee Stock Purchase Plan (ESPP)
A company benefit that allows employees to purchase company stock at a discount, typically through payroll deductions.
ESPPs let employees buy company stock at a 10-15% discount to market price, usually through regular payroll deductions over a 6-month offering period. Common at public companies and late-stage pre-IPO startups.
In Practice
The company's ESPP allowed employees to contribute up to 15% of salary to purchase stock at a 15% discount to the lower of the price at the start or end of the 6-month offering period.
Why It Matters
ESPPs are a significant wealth-building benefit that many employees overlook. The guaranteed discount plus the lookback provision can yield substantial returns.
VC Beast Take
ESPPs are free money that most employees leave on the table. At a minimum, the 15% discount on day one is better than any savings account.
Related Concepts
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