4 ms·

The stock options priced is based on the 409a valuation, not on what investors paid in the last round, so they might not be worthless.

• x0x0 11y ago
  what is a normal ratio between the two?
  • exw 11y ago
    It depends on the state of the company. In the beginning, the share price between common (employee) and preferred (investor) stock can be very significant (10x or more), but as the company gets closer to IPO, the value between common and preferred stock converges to 1. Some unicorns get around this issue by issuing RSUs that retain some value even if the share price drops.
  • erichurkman 11y ago
    It can range quite a bit, but you can figure around the 25 - 35% range as a rough estimate for most venture backed companies. Companies that are near-to or are already cash flow positive can move the needle higher.
  • enra 11y ago
    Depends on the stage. Early stages the difference can be 1000-10x. Later stages the difference is much less, 10-1x but usually by then companies start issuing RSU's not options. RSU's are stock given with the current valuation (eg. you get 10,000 shares, which are worth of $1M with the current valuation). If the company IPO with that valuation, you get ($1M - taxes). If they IPO with less or more, you get less or more. Difference is that with options you actually have to exercise (buy the stock) with the given strike price.