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There are only effectively 2 ways in which startup equity becomes cash: - IPO (least likely) - a top-10 unicorn which access to the secondary market Unfortuna
by ryanobjc 11y ago
There are only effectively 2 ways in which startup equity becomes cash:
- IPO (least likely)
- a top-10 unicorn which access to the secondary market
Unfortunately during a buy-out, your options are not actually equity and you are not likely to participate in the M&A cash. Most companies do the right thing and issue you a competitive offer and maybe a bonus, but honestly it's hardly much more than that you could have gotten if you worked at Google/whatever all along.
- kohanz 11y agoAre you saying that when early employees (e.g. Engineer #1 or CTO) are offered equity, that it is usually awarded as options and not true ownership shares in the company?
- ryanobjc 11y agoOften times yes! First employees have an outcome differential of 10x vs founders. This is often marked up to founders taking on substantial risk. But the way funding works these days, with EIRs and networking, the founders are taking a lot less risk than you'd think. The total comp laydown of a startup has the potential of being very good, but also, potential needs to be discounted against not hitting the huge hockeystick.