Kareem Amin, co-founder and CEO of sales automation startup Clay, saw the company’s breakthrough in 2022 after seven years of hard work. Since then, Clay has experienced explosive growth, reaching a valuation over $1 billion and expanding its team from a handful of employees to more than 150. Clay has made a rare move in the startup world by offering employees with at least one year of tenure the chance to sell some of their shares. The tender offer, valued at $1.5 billion, up from $1.25 billion in its Series B funding earlier that year, is a win for everyone involved. Sequoia, an investor in Clay since 2019, has agreed to purchase up to $20 million in employee stock.
Amin explained that many startups ask employees to trade lower salaries for equity, betting on the company’s future success. While most startups fail, Clay is thriving, and the tender offer is an opportunity for employees to cash in on their shares. Both current and former employees are eligible to sell equity, typically equivalent to one year’s salary.
Community Participation and Future Plans
Alfred Lin, a partner at Sequoia and Clay board member, praised the decision to allow widespread employee participation. He believes this approach highlights Clay’s unique and creative culture. The company’s AI-driven tools help salespeople and marketers automate their go-to-market strategies, with major clients like OpenAI, HubSpot, and Canva, as well as over 100 small agencies.
In February, Clay raised $1 million in a community round, allowing its direct users to invest in the startup at the same valuation as Series B investors. Amin views these initiatives as a way to ensure that the success of Clay is shared by everyone involved.
While the tender offer will give employees the chance to sell some of their shares and secure financial freedom, both Amin and co-founder Varun Anand plan to hold onto their shares. Sequoia, however, sees the tender as an opportunity to increase its stake in Clay, signaling confidence in the company’s future.
Lin noted that many employees may choose not to sell their shares, anticipating their value to rise in the future. “There will likely be less than $20 million in demand, which is unfortunate for Sequoia,” he said. If employees don’t sell now, Amin indicated that Clay plans to offer similar opportunities annually, reflecting the company’s rapid growth.
Amin hopes this tender offer will inspire other startups to offer liquidity options for their employees as well.
