Startup equity is a minefield for employees. If a startup issues options to you while the valuation is high (2021-2022, for example) and then the valuation fal

Startup equity is a minefield for employees. If a startup issues options to you while the valuation is high (2021-2022, for example) and then the valuation falls, your options could have a negative value. Follow-on investment rounds could come with liquidation preferences, meaning the most recent investors get paid first. This is commonly 1X, meaning most recent investors get 100% of their money back at minimum (if the money is there) before the remaining money can be paid into the rest of the preference stack. I've seen situations where liquidation preference can be 2X or more. It's also common for liquidation preferences to stack, so you as the employee are at the bottom of a stack of guaranteed payoffs for investors. You only get a share of what's left. Remember the Eero WiFi routers that everyone loved? Amazon bought Eero for $100 million, but most of the employees ended up with worthless shares. Amazon sweetened the deal by giving the founders multi-million dollar acquisition bonuses, but employees got nothing. There are several stories about it if you want to read more: https://mashable.com/article/amazon-eero-wifi-router-sale https://mashable.com/article/amazon-eero-wifi-router-sale > If a company was acquired for billions, and they have a contract entitling them to shares of the company, why wouldn’t they have a nice exit? Read the Eero article for a real-world example. Employees had shares, but they were issued at prices as high as $3.54 per share. By the time of acquisition and after all the other issues were sorted out, the shares were only worth $0.03. Exercising those options would have negative value. Employees who exercised early could have actually lost a lot of money on their shares.