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> Here is an optimistic way to calculate. No its a harmfully naive analysis, your "calculations" put the common shares at 10x their stated FMV.

by rkk3 5y ago

nostrademons 5y ago
Something's screwy about that 409A, it puts the valuation of the company at $3.85M on $10M in invested capital, i.e. the company is worth about 1/3 what investors have put into it. Would be consistent with a down round and failing company, though. I'd run. If the numbers there are correct, neither management nor investors really have any confidence in the company. As an employee you shouldn't either, particularly for that far under market in cash comp, and if somebody is willing to double your cash compensation, take it.
- rkk3 5y ago
  > Something's screwy about that 409A, it puts the valuation of the company at $3.85M on $10M in invested capital That is not the valuation of the company, not all shares outstanding are common, some are preferred which are going to have a substantially higher FMV for an early stage. I don't know what a "normal" multiple/mark-up preferred would normally have at this stage, obviously it varies on terms. 55M shares outstanding this early would not be the sign of a "healthy" cap table unless they didn't start with the standard 10M outstanding.
  - throwaway_9989 5y ago
    The preferred price is about $0.9 (I heard it's been like this for the last 2 rounds). Does that mean the current valuation of the company is $49M? The parent comment is also correct. We've experienced a down round due to the pandemic.
    - comp_throw7 5y ago
      If the company's gone through a down round, it's very likely they took funding on unfavorable terms (i.e. worse than 1x liquidation preference), which makes it that much less likely your (non-preferred) equity would ever be worth anything. Take the cash offer (though, if you're in the US and have 4 years of experience, $120k is a bit of a joke too; you should be able to do substantially better even limiting yourself to full-remote companies).
      - rkk3 5y ago
        > If the company's gone through a down round, it's very likely they took funding on unfavorable terms (i.e. worse than 1x liquidation preference), which makes it that much less likely your (non-preferred) equity would ever be worth anything which is expressed in the preferred share's being valued at 13x the common shares
    - rkk3 5y ago
      > Does that mean the current valuation of the company is $49M? No.

> Here is an optimistic way to calculate. No its a harmfully naive analysis, your "calculations" put the common shares at 10x their stated FMV.

by rkk3 5y ago

> Here is an optimistic way to calculate. No its a harmfully naive analysis, your "calculations" put the common shares at 10x their stated FMV.

nostrademons 5y ago

Something's screwy about that 409A, it puts the valuation of the company at $3.85M on $10M in invested capital, i.e. the company is worth about 1/3 what investors have put into it. Would be consistent with a down round and failing company, though. I'd run. If the numbers there are correct, neither management nor investors really have any confidence in the company. As an employee you shouldn't either, particularly for that far under market in cash comp, and if somebody is willing to double your cash compensation, take it.

rkk3 5y ago
> Something's screwy about that 409A, it puts the valuation of the company at $3.85M on $10M in invested capital That is not the valuation of the company, not all shares outstanding are common, some are preferred which are going to have a substantially higher FMV for an early stage. I don't know what a "normal" multiple/mark-up preferred would normally have at this stage, obviously it varies on terms. 55M shares outstanding this early would not be the sign of a "healthy" cap table unless they didn't start with the standard 10M outstanding.
- throwaway_9989 5y ago
  The preferred price is about $0.9 (I heard it's been like this for the last 2 rounds). Does that mean the current valuation of the company is $49M? The parent comment is also correct. We've experienced a down round due to the pandemic.
  - comp_throw7 5y ago
    If the company's gone through a down round, it's very likely they took funding on unfavorable terms (i.e. worse than 1x liquidation preference), which makes it that much less likely your (non-preferred) equity would ever be worth anything. Take the cash offer (though, if you're in the US and have 4 years of experience, $120k is a bit of a joke too; you should be able to do substantially better even limiting yourself to full-remote companies).
    - rkk3 5y ago
      > If the company's gone through a down round, it's very likely they took funding on unfavorable terms (i.e. worse than 1x liquidation preference), which makes it that much less likely your (non-preferred) equity would ever be worth anything which is expressed in the preferred share's being valued at 13x the common shares
  - rkk3 5y ago
    > Does that mean the current valuation of the company is $49M? No.