4 ms·
what about the common? i think that was the gist of the comment...do the ESOPs pay out in preferred? edit: below comment mentions using comp rsus
by 001sky 11y ago
what about the common? i think that was the gist of the comment...do the ESOPs pay out in preferred?
edit: below comment mentions using comp rsus
- harryh 11y agoStrike prices on common are almost always far far below what investors are paying for preferred shares.
- gohrt 11y agoI thought they were priced at the last round price (which is usually a discount if you interpolate the prce between rounds)
- harryh 11y agoNah, there's a big discount because preferred shares have downside protection (as well as a few other valuable things general) so common stock is valued lower. Generally a 70% discount or so.
- elsewhen 11y agothe discount varies by investment round. common shares for early stage companies come with a huge discount. or perhaps it is clearer to say that preferred shares come with a huge premium primarily because the liquidation preference (LP) is so valuable at that stage). preferred shares in later rounds have a much lower premium, because investors don't value the LP as much.
- zaroth 11y agoI've had this happen, and it's wrong. The price must be adjusted based on the terms. Common stock has basically no terms, so strike price should be much, much lower than what investors are paying for preferred.