3 ms·
> 1) the ability to invest $1M for a bunch of preferred shares; or > > 2) a bunch of ISO's at a low exercise price? Why is this the choice? how about: 3) a bu
by ssorallen 7y ago
> 1) the ability to invest $1M for a bunch of preferred shares; or
>
> 2) a bunch of ISO's at a low exercise price?
Why is this the choice? how about:
3) a bunch of ISOs of preferred shares at the current FMV
Why is a VC putting in $1m riskier than an employee taking a full time job with the company? Why can't an employee who vests shares get the same preference when they reinvest their own money into the company?
- zapita 7y agoAlso: why do startups cover the new hire’s early exercise cost upfront when the new hire is an executive, but not for other employees ?
- jariel 7y agoBecause 'Cash in hand' is worth more than the risky nature of what you are able to deliver with your 'time in', esp. after receiving a salary. That you will never get 'preferred' ISO's is a fundamental fact of the market, which accounts for such risks. Implying it's 'unfair' is more or less like saying 'your salary is only 1/2 what it should be'. There's definitely an underlying reason your salary is roughly where it is, it's better to understand why it is what it is.