Rich on Paper, Stuck in Reality: How Startup Employees Borrow Against Their Equity

Banks won't quote

Terence McMenamin says his team called banks on both coasts and found that someone holding $100,000 in shares will not even get a quote. In his account, banks might extend a line of credit to holders with more than $10 million, but most employees don't hold that much when they join a company.

He says incumbent lenders price deep tech assets as speculative venture, a view Tech Dollar does not share. He calls the technology "civilization scale."

Borrowing versus selling

Terence McMenamin says that putting $300,000 in the bank by selling startup equity could cost around $1.1 million once the tax bill and a three x upside are counted. Tech Dollar instead offers the full value upfront at around 1% a month, which he compares to a credit card rate.

Borrowers bring their holdings over from Carta or Pulley, and the shares are priced with live secondary data from Caplight, which he says covers 500 broker dealers.

Credit lines over tenders

Terence McMenamin says equity timelines have stretched from five to six years to eleven plus years. He pitches embedded liquidity programs for companies that might otherwise spend $100,000,000 buying back employee equity. Under the program, every employee would get a credit card collateralized by their equity in the startup.

He says there is no floor on company size. Tech Dollar approaches companies by telling them it has 10 people there who want loans.

Stablecoin rails

Terence McMenamin describes the Techdollar token as a receipt for the underlying collateral. Users will be able to mint it with Agora's AUSD, Tether's USAT and possibly USDG, and there will be pools on Curve. He says the company will not sign exclusivity deals with chains or issuers, and he expected the stablecoin to go live this month.