Los Angeles-based satellite innovator Apex recently announced an impressive $200 million Series C funding round, attracting major investors including Point72 Ventures, 8VC, Andreessen Horowitz, StepStone Group, and Washington Harbour Partners. Founded by Ian Cinnamon and Maximilian Benassi in 2022, Apex specializes in manufacturing tailored satellite buses critical for diverse space missions. This latest investment round propels Apex’s total equity funding to $322 million.

But beyond the headlines and notable backers lies a significant tax advantage opportunity for Apex’s founders, early employees, and investors: Qualified Small Business Stock (QSBS) and QSBS rollover planning.

Assuming Apex was structured as a C-Corporation from inception, equity issued to early stakeholders potentially qualifies as QSBS under Section 1202 of the Internal Revenue Code. QSBS allows shareholders to exclude up to 100% of capital gains (up to $10 million or 10x their basis) from federal income taxes, provided the stock is held for a minimum of five years.

Here’s the critical scenario: If any early stakeholders or investors liquidated positions in Apex through secondary transactions during this Series C funding, they may face a significant tax liability, especially if their holding period fell short of the QSBS five-year requirement.

Since Apex was founded just 3 years ago in 2022, this is most likely the case.

However, there is a solution.

Under Section 1045, shareholders can maintain QSBS tax benefits by rolling their sale proceeds into another QSBS-eligible investment within a 60-day period. This action allows immediate tax deferral and continues the QSBS clock, ultimately positioning stakeholders for future tax-free benefits.

*Try our QSBS Rollover Calculator and find out how much you could save in tax.*

For example, if an early Apex investor sold $3 million worth of stock in this Series C event, without a rollover, they'd owe substantial federal capital gains and state taxes. But by reinvesting those proceeds into a qualifying new QSBS venture within 60 days, the entire tax liability is deferred and then eliminated, provided the rollover stock meets QSBS criteria and is held through the five-year horizon. There are ways to do this prudently, while saving significant money in tax liability - potentially tens of millions of dollars.

The QSBS rollover strategy provides a powerful option for Apex insiders to realize liquidity today without sacrificing QSBS tax advantages.

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You could benefit from a QSBS rollover if:

You recently sold QSBS before the 5 year minimum hold period
You recently sold QSBS that you held for 5 years, but your gain exceeds $10M
You’re considering an exit in the next 1-4 years and want to think ahead about tax planning
Are an angel investor seeking flexible QSBS opportunities to help defer gains

The Vint Retail Partnership Program can be a solution for QSBS gain holders in need of a flexible, low-risk, and relatively liquid QSBS opportunity. Get in touch with our team today to learn how to partner with us and potentially save millions in gains tax from a stock sale.

Here are some of the questions we typically ask when having a first meeting with potential partners:

Did you recently sell or are you holding Qualified Small Business Stock?
When did you sell your stock?
Was this your first liquidity event?
Are you a founder, early employee, outside investor/angel, etc?
Are you certain that your stock met the Active Trade/Business and other requirements under Section 1202? (Outside of holding period requirements)
What is your intended rollover amount?
How long did you hold your initial stock?

QSBS Spotlight: You Can See Apex Founders’ Tax Savings From Space

QSBS Rollover Calculator: Find Your Tax Savings Potential