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The big problem I have with startup equity compensation these days is the time it takes to get to get to liquidity. Going from founding to an IPO takes what, 8
by htormey 9y ago
The big problem I have with startup equity compensation these days is the time it takes to get to get to liquidity.
Going from founding to an IPO takes what, 8-10 years? Even assuming things go that well if your equity doesn’t have terms like early excercise or a long time to decide if you want to exercise it’s not a good deal.
It’s easy to get locked into working with below market compensation in scenarios like that.
Also very few companies allow for things like secondary markets.
It’s going to be interesting to see how or rather if this gets addressed in the coming years.
- jdc0589 9y ago> Going from founding to an IPO takes what, 8-10 years? probably, but an IPO is not the only event that triggers an equity payout. Getting sold/acquired will also trigger an equity payout, and those are much more common events than an IPO.
- s73ver_ 9y agoBut in those situations, you usually don't get the value of the stock. You end up with equity in the acquiring company, and now you've got to vest for another year or two.
- htormey 9y agoI think exit times are taking longer across the board, especially compared to earlier periods in SV history: http://www.angelblog.net/Venture_Capital_Exit_Times.html http://www.angelblog.net/Venture_Capital_Exit_Times.html