3 ms·
Can you give a real example with numbers (fake numbers okay)? I can't begin to understand how owning a % of a company gets reduced to pennies in the end.
by adtac 5y ago
Can you give a real example with numbers (fake numbers okay)? I can't begin to understand how owning a % of a company gets reduced to pennies in the end.
- Johnny555 5y agohttps://www.vestd.com/blog/how-equity-dilution-affects-your-employee-share-scheme https://www.vestd.com/blog/how-equity-dilution-affects-your-...
- synacq 5y agoThe article shared by Johnny555 is a good breakdown of the mechanics. Speaking to my own experience, my ballpark estimate is that I received an order of magnitude less money than I would have had I received my initial grant as a percentage of the final sale price. Pennies is hyperbole, but the amount I received from the 9 figure acquisition was thousands of dollars (instead of hundreds of thousands of dollars based on my original grant).
- molsongolden 5y agoIt's possible if a company has raised a large amount of funding and/or the investors have aggressive terms. Liquidation preferences[1] mean preferred shareholders get paid out before common stock holders receive any sale proceeds. [1] https://medium.com/@CharlesYu/the-ultimate-guide-to-liquidation-preferences-478dda9f9332 https://medium.com/@CharlesYu/the-ultimate-guide-to-liquidat...
- squeaky-clean 5y agoYou don't really own a percentage of the company, you own a number of shares.
- deleted 5y ago[deleted]