I keep getting contacted by former coworkers (engineers) who either recently left, or, who are miserable and want to leave somewhere where I used to work. The common thread is they cannot afford to exercise their vested options and pay the tax so they are letting options expire asking me for advice since I used to work there. Is this really common among other tech companies? Shouldn't the <i>current</i> investors (institutional or otherwise) have some interest and ability to buy up employee vested stock?
There's no reason to. First, you're incentivizing people to leave if you offer to buy their stock - its one form of golden handcuffs. Second, its generally such small percentages that it's not worth the time.
Talking with a cfo, the only time you'll likely see this is if the company raises a new round and asks the new investors to earmark some of the money for existing employees. But the percentage will be limited, and won't be given to people who already left.
Why would they buy them back when they can just wait the 90 days for it to expire? I once sold my options in an authentication not fully understanding the tax issues, wish I would have let mine expire...
There are some funds out there that will help employees exercise their stock options (for a %). 137 Ventures is one of them. Generally, these types of funds will only be interested in the stock of truly breakout companies.