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The first startup failed and I had joined late anyway. The second startup I joined when it was only 5 months old and stayed for 3 years. I asked how many shar

The first startup failed and I had joined late anyway. The second startup I joined when it was only 5 months old and stayed for 3 years. I asked how many shares there were in the company before I joined. I was told X amount and just 4 months later I learned it was 1.4X when one of the managers let it slip. From the one financial document they published I was able to determine that after 3 years the numbers of shares had grown by 2.5X Basically they were issuing new shares to new employees rather than giving them out from an existing pool of shares. I didn't ask any questions as they were telling us someone wanted to buy the company. They gave employees the opportunity to buy more shares because they told us the sale of the company was going to happen. I asked how many shares there were now and they avoided the question 3 different times. I decided not to invest. For various reasons I lost faith in the management and decided to look for another job. I only learned about liquidation preferences recently.

bogomipz 5y ago
>"Basically they were issuing new shares to new employees rather than giving them out from an existing pool of shares." Wow. Why would they do this? Is there an upside to that? I don't think that's common correct?
- lizknope 5y ago
  I don't know what is normal. I had wrongly assumed that some percent of the stock would be pre allocated for hiring future employees. As far as I know we never got any outside investment after our initial angel investor that we had from the beginning. Because of how the company was registered we got one financial document per year that they were legally obligated to file. On that I could determine my ownership percentage by calculating how many of my shares had vested and then simple division told me the total number of shares. I correlated this with 3 other employees and we determined the number of shares each year and they had gone up 2.5X from the initial number I was told when I joined.

bogomipz 5y ago

>"Basically they were issuing new shares to new employees rather than giving them out from an existing pool of shares." Wow. Why would they do this? Is there an upside to that? I don't think that's common correct?

lizknope 5y ago
I don't know what is normal. I had wrongly assumed that some percent of the stock would be pre allocated for hiring future employees. As far as I know we never got any outside investment after our initial angel investor that we had from the beginning. Because of how the company was registered we got one financial document per year that they were legally obligated to file. On that I could determine my ownership percentage by calculating how many of my shares had vested and then simple division told me the total number of shares. I correlated this with 3 other employees and we determined the number of shares each year and they had gone up 2.5X from the initial number I was told when I joined.