4 ms·

This post is too pessimistic. If this startup gets to a $1b valuation, you will likely have some avenues towards liquidity. 10x dilution would be extreme.

mahyarm 11y ago
Not really. If your are a current employee, you usually can sell %10 of your vested stock during secondaries, which amounts to about $20k until you reach full vesting at the $1b valuation. The secondaries come up every one or two years. If your not working there anymore, you cannot enter the secondary. Most of your stock is still illiquid, and GooFaceSoft is still the better idea. Finding sellers outside of employer sponsored secondaries can be pretty hard and involves a lot of labor. Time better spent making money directly with new consulting clients. Usually the corporation wont be very helpful in selling your stock. ESO fund & others can be pretty picky and you have a good chance they might change their mind a few months later as you try after you have gotten all of your required documentation. As an employee / contractor, you won't have investor level access to financials, reporting or the resources to fully understand them. That dilution level does happen. It's happened to friends as they climbed from a $5m company to a $1b company. Also if you get options or equity of some sort, make sure that the options do not expire until at least 20 years later. You do not want the 90 days after termination problem a lot of people have. 20 years seems long, but there are stories of people's 7 year stock options expiring because the company hasn't gone public in those 7 years! And make sure you have easy access to these required documents, since they are often required to sell your equity when the company is private: http://www.slideshare.net/KeyvanFirouziCFACPA/equity-101-for-engineers-togo-v04 http://www.slideshare.net/KeyvanFirouziCFACPA/equity-101-for...

mahyarm 11y ago

Not really. If your are a current employee, you usually can sell %10 of your vested stock during secondaries, which amounts to about $20k until you reach full vesting at the $1b valuation. The secondaries come up every one or two years. If your not working there anymore, you cannot enter the secondary. Most of your stock is still illiquid, and GooFaceSoft is still the better idea. Finding sellers outside of employer sponsored secondaries can be pretty hard and involves a lot of labor. Time better spent making money directly with new consulting clients. Usually the corporation wont be very helpful in selling your stock. ESO fund & others can be pretty picky and you have a good chance they might change their mind a few months later as you try after you have gotten all of your required documentation. As an employee / contractor, you won't have investor level access to financials, reporting or the resources to fully understand them. That dilution level does happen. It's happened to friends as they climbed from a $5m company to a $1b company. Also if you get options or equity of some sort, make sure that the options do not expire until at least 20 years later. You do not want the 90 days after termination problem a lot of people have. 20 years seems long, but there are stories of people's 7 year stock options expiring because the company hasn't gone public in those 7 years! And make sure you have easy access to these required documents, since they are often required to sell your equity when the company is private: http://www.slideshare.net/KeyvanFirouziCFACPA/equity-101-for-engineers-togo-v04 http://www.slideshare.net/KeyvanFirouziCFACPA/equity-101-for...