4 ms·

The equity (%) without the actual cash value of the options is basically a vanity number - it does not mean much and is not comparable between the companies.

• twelve40 5y ago
  If they ever did a 409a, they have to share that information with employees, which at least lets you estimate the current upper bound on the cash value of your options. Sure, very far from money in the bank, but knowing the current upper cash bound can still be used to compare different offers.
  • msrsan 5y ago
    Yup, that makes sense on an individual company basis but - that data is not in the sheet though.
  • myrandomcomment 5y ago
    A 409a should be a true measure of the value of a company, but in reality it is something that can be manipulated. There is a balance between valuation for the purposes of funding and raising your stock value so high that it can impact hiring as a function of perceived upside. Getting wrong on the high side can effect the next round, devalue shares issued existing staff causing a repricing or the need to issue more shares to existing staff to keep them around.
• bspear 5y ago
  No, if you're say, an Eng manager with a Series B offer, there is a standard equity % band
  • engmgrmgr 5y ago
    News to me. Company value, dilution, risk, revenue, profit, outlook, etc. have significant weight.
    • enigmatic02 5y ago
      Yes those matter to selecting any company, but equity % does as well
      • engmgrmgr 5y ago
        Why? Assuming we’re talking about normal employee options, if you’re early and get a big % that gets diluted, someone with a smaller % later can end up with more shares.
        • bspear 5y ago
          Strike price is much lower, so it's cheaper to exercise and potentially more tax-favorable due to QSBS too
• andrewingram 5y ago
  Whilst I agree equity % alone doesn't give you a picture of the value of those options, what it does communicate is whether it's the kind of company that actually gives out meaningful equity, which is useful information. It tells you if the company is actually serious about making a big exit a life-changing event for all early employees.
  • nend 5y ago
    The odds of a company making it that big are so low though, you're chasing lottery tickets with that outlook, which I suppose is still useful information.
    • smeej 5y ago
      I actually recommend chasing lottery tickets to people who are in common jobs like customer support or social media engagement. You could do those jobs practically anywhere, but fast-growing tech startups tend to pay relatively well (at least as well as established players) and throw in a lottery ticket. If you enjoy wearing a variety of hats, like you'll need to in a smaller company, you might as well do a couple years each at a bunch of different startups and collect lottery tickets along the way. People don't tend to get rich in support jobs, but a bonus of even a few tens of thousands of dollars can be a game-changer, and on the off chance you catch a ticket that ends up being worth a couple hundred grand (what happened to me that made me start recommending this!), it'll change your life! Rarely will a customer support role be offered shares that are worth more than a couple grand at the time of grant, and it's not always worth sticking around the whole vesting period, but if you get in late enough that the company has proven product/market fit (Series A and following, at least a few dozen employees, 3+ years), it probably won't go all the way to zero.
      • np_tedious 5y ago
        Unless they have extended their exercise window beyond that standard 90d, those lottery tickets may cost a lot is money to retain after leaving for another job. So much so that companies exist solely to extend loans for them. You don't get to just collect multiple lottery tickets without either going out of pocket or watering down your share significantly.
• Kalium 5y ago
  Percent isn't a useful metric by itself, but it's often more useful than number of options or grants. Often that's what is pitched to prospective hires. Or, worse, an ill-defined number of shares and a highly optimistic valuation of an illiquid entity.
• cloverich 5y ago
  Perhaps less relevant as the fundraising proceeds and the valuation approaches the targeted IPO price. But early on, the valuation will probably change drastically from Seed to C and securing an appropriate % is a good strategy. Many people don't know what that is -- for instance I accepted my first seed stage equity offer of 0.5% (negotiated up from 0.25%) but I now know that I was slightly lowballed. But you still make a good point. 1% from two 23yo first-time foundres with little experience, vs 0.5% from established founders with prior exits, solid networks, and reputable VC's presumably greatly increases your odds of a high valuation exit, so perhaps even seed / A stage its worth weighing that more than the percent.
• gumby 5y ago
  In a private startup the cash value of the options doesn't tell you anything. Typically the company tries to keep the strike price of common options as low as possible, to the degree the 409a consultant will let them.