Latest / The Startup Exit Podcast with Fexingo: IPOs, Acquisitions, and Founder Liquidity Events / How Founders Use IPO Pop to Structure Post-Exit Wealth
Transcript
- Lucas: So it's a Friday in late June 2026. Your startup just went public two days ago. The IPO priced at 30 bucks a share. But by the end of the first day, it's trading at 45. That's a 50 percent pop. What do you do? That's the question we're unpacking today. Luna: Right, because for most founders, that pop feels like validation. But also it's the first real test of whether they have a plan for their own wealth. Lucas: Exactly. And I think the temptation is to just hold, let it ride, because you believe in the company. But the data shows that the majority of founders who do that end up leaving significant money on the table — either because they sell too late, or because they get hit with taxes they didn't anticipate. Luna: And this is actually a good moment to mention something that's important to us. This podcast is completely ad-free, and we want to keep it that way. If these conversations are useful for what you're building or running, you can support the show at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. No pressure, just a way to keep this independent. Lucas: Yeah, exactly. So back to the pop. The first thing to realize is that the 50 percent gain in the first day isn't really 'your' money yet. You're still subject to a lockup — typically 180 days. So you can't sell those shares immediately. But you can start planning. Luna: Right, because the pop changes the calculus for any pre ipo loans or secondary sales you might have done. If you had a loan against your shares at a 30-dollar valuation, now the collateral is worth 50 percent more. Lucas: Exactly. And that's where a lot of founders get into trouble. They take a pre ipo loan based on a conservative valuation, then the stock pops, and they think they can just increase the loan. But lenders will often reprice based on the new market cap, which means higher interest costs or margin calls if the stock drops. Luna: So what's the smarter play? I've heard of something called a 'collar' structure — where you cap your upside in exchange for downside protection. Lucas: That's exactly right. A collar is a combination of buying a put option and selling a call option on your shares. You set a floor — say, 40 dollars — and a ceiling, say 55. So if the stock drops to 35, you're protected. If it goes to 60, you miss out on some upside, but you've locked in a range. Luna: And the beauty is that you can do this while you're still in lockup, because it's a derivative, not a sale. So you're not violating SEC rules. Lucas: Exactly. And it gives you certainty. You're not trying to time the market. You're saying, 'I'm happy with a 33 percent gain, and I'll accept a 10 percent loss below that.' That's a disciplined plan. Luna: But some founders want to sell immediately after lockup. Is that a mistake? Lucas: It depends. If you sell everything on the first day of eligibility, you're likely to hit a tax wall. In the US, if you're selling shares that have appreciated since the IPO, you're paying short-term capital gains — which is ordinary income rates, up to 37 percent federal. Plus state taxes. Luna: So a better approach might be to sell gradually, over multiple quarters, or even years, to spread out the tax burden. Lucas: Right. And you can also use a 'diversification trust' — a structure where you transfer shares into a trust, which then sells them over a predetermined schedule. The trust pays the taxes, and you get the proceeds. It's not for everyone, but for founders with tens of millions of dollars in stock, it can save millions in taxes. Luna: I want to bring in a real data point. This week, ARKK — Cathie Wood's flagship fund — is up 6 percent in five days. That's partly because of the IPO pop in some of her portfolio companies. But if you look at the broader market, even Apple is up 2.4 percent. So there's a lot of enthusiasm. Lucas: Yeah, the market is definitely in a risk-on mood. And that creates a window for founders to exit. But the key is not to get caught up in the euphoria. I've seen founders who waited for a 'better' pop — the stock went from 45 to 55, and they thought it would go to 80. Then it corrected back to 35. Luna: That's the classic 'holding too long' mistake. So what's the best practice? Do you set a target price and stick to it? Lucas: You should. But it's not just a single target. You want a tiered plan. For example, you decide: 'I'll sell 10 percent of my shares if the stock hits 50, another 10 percent at 60, and so on.' That way you're selling into strength, but you're not betting everything on one price. Luna: And that ties into something we've talked about before — the secondary block trade boom. Some founders are using those even before the IPO, to get liquidity at a known price. Lucas: Right. And that's actually a good hedge. If you sell a chunk in a secondary at a 30-dollar valuation, you've already de-risked. Then the IPO pop is pure upside on your remaining shares. But you have to be willing to sell some before the pop. Luna: So the pop itself is both an opportunity and a trap. The opportunity is obvious: you're wealthier. The trap is that you think it's permanent. Lucas: Exactly. And the data backs that up. A study of IPOs from 2010 to 2020 found that the average stock lost 30 percent of its first-day gain within six months. So if you're banking on that pop lasting, you're likely to be disappointed. Luna: Especially in sectors like fintech and crypto. Look at Coinbase — COIN. It's at 163 today, but it's been incredibly volatile. If you sold at the pop, you'd be doing fine compared to the lows. Lucas: Right. And that's the key insight: the IPO pop is not your exit. It's the starting point for your exit plan. You need to decide, before the lockup expires, what you want to achieve. And then execute methodically. Luna: So let's say I'm a founder, and my stock pops to 45. I want to lock in gains but also keep some upside. What's the next step after the lockup? Lucas: One popular strategy is a 'variable prepaid forward contract'. You basically sell your shares to a bank for a fixed price today, but you retain some upside if the stock goes up. It's complicated, but it gives you cash now while deferring taxes. Luna: That sounds like a way to have your cake and eat it too. But I imagine the fees are high. Lucas: They can be. But for a founder with a hundred million dollars in stock, paying a couple percent in fees is worth it if you get liquidity and tax deferral. The alternative is a forced sale at a bad time. Luna: And what about the emotional side? Founders often feel a strong attachment to their shares. They don't want to sell because it feels like selling a part of their identity. Lucas: That's real. And it's one reason why many founders don't plan well. They think the stock is an extension of their company, not a financial asset. But the truth is, you're already diversified in terms of your human capital — you built the company. Selling shares is just financial diversification. Luna: So the pop is a signal. It tells you the market values your company at a premium. The question is: are you going to take advantage of that premium or wait until it fades? Lucas: And the data from this past week — with stocks like Palantir up 0.4 percent, and Roblox up 19 percent in five days — shows that individual stories vary wildly. But the pattern is consistent: the best time to plan for your exit is before the IPO, not after the pop. Luna: So if you're a founder listening, and you're maybe a year out from filing, what's the one thing you should do today? Lucas: Talk to a wealth planner who specializes in founder liquidity. Set up a meeting to discuss options — loans, collars, trust structures. Have a plan that's written down and agreed with your family. Because when the pop comes, you'll be too busy celebrating to think clearly. Luna: And celebrate you should. Just don't let the celebration cost you your financial future. Lucas: Exactly. That's it for today. Next time, we'll look at how the secondary market for pre ipo shares is evolving — and why some founders are skipping the IPO altogether.