Coronavirus and Its Impact on 2020 Tech IPOs:
An Official Guide on How to Get Your Finances In Order as a Startup Employee.

March 11, 2020

Photo by Unsplash

As you all know, we’re at the start of a pandemic and the rapid spread of coronavirus could bring the global economy to a standstill. Historically, pandemics have cost the global economy billions and according to the World Bank, SARS global cost was at $54 billion. Most recently, economists pegged the cost of the global coronavirus pandemic at $1 trillion and beyond!

The long standing impacts on the US economy are still unknown but our public markets have already taken a hit, which leads to our next topic:

Several tech companies were planning to go public in 2020, their employees planned their lives around a liquidity event. Given the current state of public markets, many of these planned IPOs are now unlikely. So you might be thinking, who’s there to help these employees through the rough patches, help them with liquidity needs, taxes and other financial steps. We’ve put together a guide on how to navigate your personal finances during these turbulent times.

First Things First: Emergency Fund

The first step in reaching financial wellness is setting up an emergency fund, especially during a pandemic. You want to have at least 3 to 6 months’ worth of living expenses saved in cash. This fund will help cover a period of time off work, medical bills or unexpected expenses. If you don’t have this already set up, make it your priority now.

Don’t Touch Your Face, Don’t Touch Your Stock

On Monday, March 9th 2020, we experienced the worst day in public markets since 2008. The Dow sank 2000 points, the S&P dropped more than 7% while triggering circuit breakers that temporarily helped halt a further plunge. If you’ve experienced a significant hit to your investment portfolios, you’re not alone. Don’t follow the herd and panic sell, wait it out. The market will eventually recover in the long run and if anything, this can potentially be a good time to invest in public markets if you haven’t already.

Private Share Liquidity

If you were expecting a liquidity event via an IPO and are now uncertain about it being realized, don’t sweat. There’s other paths to liquidity: You might want to check with your employer to see if they’re running any tender offers. Tender offers are company organized initiatives for buybacks and secondaries. Another avenue is to look into equity/option financing vehicles that don’t impact your credit score and don’t require you to make payments until there’s an IPO or liquidity event. Before making any decisions, consult with a tax and equity expert to make sure you receive a financial solution that’s tailored to you.

Related link: https://www.goodwealth.com/employee-stock-options

It’s Cheap to Borrow

The Federal Reserve recently announced a rate cut, meaning it could possibly cost you less to borrow money. Maybe it’s time to rebundle your debt, refinance your student loans or mortgage. Saving a couple hundred dollars a month on interest payments adds up, take action.

Last But Not Least

At GoodWealth, we’re building tools to help startup employees reach optimal financial wellness. We believe every employee deserves to have access to hyper-personalized and unbiased advice, regardless of their net worth. If you’d like to learn more about our tailored solutions and educational webinars, drop us a note at: https://www.goodwealth.com/form

And remember...

This is a stressful time for many, make the health of yourself and loved ones a priority. As with all global epidemics, this too shall pass. 

Disclaimer: This article is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Before making any final decisions or implementing financial strategies, you should consult with an accountant or financial advisor who is fully aware of your individual circumstances.