4 ms·

Well, the number I'm using is what the company has told me is their current valuation (it's slightly higher than what was reported by press after the last round

Well, the number I'm using is what the company has told me is their current valuation (it's slightly higher than what was reported by press after the last round of funding, but not dramatically so). The share prices I'm being given are stated as a fact based on this valuation (along with optimistic projects of what they might look like were the company to multiply in value). Should I ask about liquidation preferences? % of company that the # of RSUs I'm being offered represents? I guess there's no harm in asking.

mindcrime 11y ago
You can ask about all that stuff, but at the end of the day, you're almost certainly not going to get stock with any kind of liquidation preference yourself, and your stock is almost certainly going to be at risk of dilution in a way that you can't control or even effect. If the company raises 12 more rounds of funding before going public, you might wind up going from owning, say, 2% of the company, to owning .000000000000012% of the company. The thing is, there's just really no way to know what will happen. I say "value the stock at $0 and if it turns into more than that one day, consider it 'found money'".
rahimnathwani 11y ago
"The share prices I'm being given are stated as a fact based on this valuation" If the company multiplies in value, and VC funds' liquidation preferences are 'non-participating preferred', then the liquidation preferences won't have any effect, and each of your shares will be worth the same as each of theirs. (Oh, and this assumes they don't have any anti-dilution protection.) But, the company's value going up by a multiple isn't a sure thing, so your shares are probably worth less. "Should I ask about liquidation preferences? % of company that the # of RSUs I'm being offered represents?" If you want to know how much your shares are worth, then yes.

mindcrime 11y ago

You can ask about all that stuff, but at the end of the day, you're almost certainly not going to get stock with any kind of liquidation preference yourself, and your stock is almost certainly going to be at risk of dilution in a way that you can't control or even effect. If the company raises 12 more rounds of funding before going public, you might wind up going from owning, say, 2% of the company, to owning .000000000000012% of the company. The thing is, there's just really no way to know what will happen. I say "value the stock at $0 and if it turns into more than that one day, consider it 'found money'".

rahimnathwani 11y ago

"The share prices I'm being given are stated as a fact based on this valuation" If the company multiplies in value, and VC funds' liquidation preferences are 'non-participating preferred', then the liquidation preferences won't have any effect, and each of your shares will be worth the same as each of theirs. (Oh, and this assumes they don't have any anti-dilution protection.) But, the company's value going up by a multiple isn't a sure thing, so your shares are probably worth less. "Should I ask about liquidation preferences? % of company that the # of RSUs I'm being offered represents?" If you want to know how much your shares are worth, then yes.