4 ms·
You wrote "with the cash value equal to the what that person would have been paid if there was cash in the company". There's no upside there. Why wouldn't he/sh
by btmorex 16y ago
You wrote "with the cash value equal to the what that person would have been paid if there was cash in the company". There's no upside there. Why wouldn't he/she just get a job at a normal company and actually get paid over maybe getting paid the same amount in the future?
- yrashk 16y agoGetting job at a normal company is also "safer" than joining a startup for just equity. This cash value will once be eligible for conversion to equity at a decent discount. I personally see this as stock compensation on steroids. With pure stock compensation there is no chance to recover any cash whatsoever if company fails, also prior stake estimation may be unfair (i.e. overestimated or underestimated).
- JoachimSchipper 16y agoWell, the investors (hopefully smart people) in that particular round hope to get more money for their shares than they paid for them - so one could make the case that one dollar of shares is somewhat more valuable than one actual dollar. On the other hand, what employee wants to put his wages into a highly-risk investment like a startup? (High-risk investments can pay off, sure, but you don't want to take those risks with money you need for food and housing.)
- yrashk 16y agoThat kind of employee that could work for equity. There's not much of those, but that's how it seems to work ;) It's not even necessarily full time at the very beginning