4 ms·
Another (very) important consideration is the tax you will be liable for at the time of exercise but possibly before liquidity in the event of success and the i
by AbrahamParangi 7y ago
Another (very) important consideration is the tax you will be liable for at the time of exercise but possibly before liquidity in the event of success and the information asymmetry between most engineering hires and the founding team.
It's for this reason that I believe 10 year exercise windows are the right thing to do, and young engineers should be encouraged to avoid startups with ~90 day post-employment exercise windows.
P.S. Hi Ben!
- agrajag 7y agoThe 90 day post-employment exercise window is a requirement for them to be treated as incentive stock options, which have significant tax advantages over non-incentive stock options. It's not a clever thing that startups do to try to increase retention.
- mercutio2 7y agoAre the tax advantages meaningfully different for ISOs vs. NQSOs if you 83b your NQSOs? It seems to me anyone who really is banking on their startup having huge valuation growth (and can afford to do it) should 83b their options, either way.
- novok 7y agoTBH the exercise windows should disappear. The 10y lifetime of VC funds is plenty enough incentive to push for a liquidity event eventually.