Gecko Robotics Inc. is letting employees cash out some of the stock options they have of the company as part of a tender offer the North Side-based tech firm has made with an unnamed investor, a source familiar with the company's plans told Pittsburgh Inno.
But despite this deal being a rarity for a local tech company to produce in the first place, few Gecko employees have let go of the grip they have on their options since a deal to do so first began on Dec. 1, the source—unauthorized to speak publicly about the company on this matter—said. Only 30% or roughly $1.5 million of the $5 million in options this investor is willing to purchase from current Gecko employees has been realized so far, the source said.
With the offer set to close by the end of the day on Dec. 18, it's unlikely much more progress on the deal will be made before then.
When reached for comment, Gecko CEO Jake Loosararian declined to speak about the specifics of the offer or the intentionality behind employees' unwillingness to cash out on some of their options. Nearly all of Gecko's roughly 240 workers receive stock options as part of their compensation package and this offer is available to employees who have been with the company, founded in 2013 by Loosararian and Chief Product Officer Troy Demmer, for three years or longer.
The unnamed investor proposed this deal amid Gecko's announcement that it added $100 million to its Series C funding round, bringing its total outside investment raised to over $222 million and with a valuation that reportedly stands at about $633 million. The option cash-out offer for employees is pegged to that valuation, the source said.
"While I can't get into specifics on who's investing or who's taking advantage of this offer, I will say that Troy and I believed from inception in the importance of creating a company where employees feel part of something special—where incredible people are all working hard to achieve a clear goal," Loosararian said in an email statement. "As we work hard, grow, and succeed, we want employees to feel that benefit from the growth in life-altering ways. We've seen huge momentum this year and that wouldn't have been possible without the hard work of every one of our nearly 250 employees."
Kim Caughey Forrest, founder and chief investment officer at Strip District-based Bokeh Capital Partners LLC, offered several possible explanations as to why Gecko's workers might not be interested in cashing out on their options, likely the main one being that employees simply think the company is worth more than what's being put on the table.
"By holding on to these shares, they're saying thanks, but no thanks to the new guy who's buying shares," Forrest said. "I think it's kind of generous to allow some people to get some cash-out. It's always hard to be paper-rich and cash-poor."
But another element at play could be that, unlike their Silicon Valley peers, it's far from typical for Pittsburgh-based tech firms to offer employees the ability to redeem the shares or options they might have in the company they work for, which Forrest said could help contribute to a broader lack of understanding about what this might mean for employees in the first place when such an offer is made available.
"Honestly, they may not understand either and I know that sounds really kind of crazy, but a lot of people where I worked at Carnegie Group didn't necessarily understand stock options," Forrest said about her time at a previous employer before she launched her own investment firm. "I had to explain that to them. They knew I was pursuing an MBA when I was there and they'd slide up to me and go: So how does this work?"
It's a sentiment that's similar to the one Loosararian shared with the Wall Street Journal back in October where he described a typical worker mentality in Pittsburgh as being "you put in your time and go home. You don’t feel like an owner."
But for Gecko's employees, it appears they're largely looking to be partial owners of the promising Pittsburgh tech firm for some time to come and especially as it continues to reach critical milestones and product launches.
The $100 million Gecko got earlier this month came from the $5 billion US Innovative Technology Fund from Pittsburgh-based billionaire Thomas Tull and the Founders Fund, which PayPal co-founder Peter Thiel established in 2005.
Additionally, the Department of Defense in recent months has taken an increased interest in Gecko as the military works to better inspect and understand the state of various large-scale military assets like nuclear submarines and warships.
With the use of Gecko's robots, the U.S. Air Force, the U.S. Navy and other customers have been able to survey these assets and others for possible damage at a level of fidelity Gecko said has yet to be replicated. Gecko's software offerings, which recently grew with a new artificial intelligence-powered product launch called Cantilever, allow its customers to better contextualize that captured data to further develop a plan to address any possible damage that may have occurred to these types of equipment, among other feats.
About 118 of Gecko's workers are based in Pittsburgh. The company also has offices in Boston, Houston, New York and Abu Dhabi, United Arab Emirates.
