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> if the company was not profitable, stocks/options don't really seem that valuable. if the company folds, there's 0 value to them. so it's not like they "lost

> if the company was not profitable, stocks/options don't really seem that valuable. if the company folds, there's 0 value to them. so it's not like they "lost" anything. Plenty of unprofitable startups have worthwhile acquihire-style exits. But it requires the leadership actually doing their jobs in marketing the company to potential buyers and getting some competing offers. Just because you're unprofitable doesn't mean there's nothing of value. Are there patents? Is the team proven to work well together and ship state of the art product? Are there any customers? The conversation in this thread makes it sound like argo.ai was basically functioning like a Ford business unit already. If I were an argo.ai team member with stock/options that became worthless when the company's funding dried up, then Ford conveniently shows up to hire everyone after their stakes are worthless, I'd not be a happy camper and would be seriously questioning if argo.ai leadership acted in good faith on behalf of the employees/shareholders. But I know nothing of what went on here. Just what I'm seeing here on HN...

hn_throwaway_99 4y ago
Note to all startup employees: If your company closes or sells for less than the total amount of funding the company took, you (almost always) get nothing from your equity. People should really understand this, because it drives home the point that taking a ton in funding rounds sets the bar that much higher for your equity to be worth anything. That is, startup investors almost always have at least 1x preferences, which means they get paid back first before common stock has any value at all. Thus, if part of your compensation is common stock options, you should absolutely demand to see information from the cap table about how much investors have already put in (and remember, of course, they may always add more in later rounds). I don't know all the details of what happened with Argo.ai, but given that Ford took a $2.7 billion impairment charge, my guess is they would have never been able to sell for more than their total funding.
beambot 4y ago
Look at comps then: Aurora has a market cap of $1.6B with approximately $0.9B cash on hand ($1.1B as of 12/31, burning $200M per quarter). In short: It's trading for less than 2x cash-on-hand. Argo was underwater -- certainly not above a $1B liquidation preference.

hn_throwaway_99 4y ago

Note to all startup employees: If your company closes or sells for less than the total amount of funding the company took, you (almost always) get nothing from your equity. People should really understand this, because it drives home the point that taking a ton in funding rounds sets the bar that much higher for your equity to be worth anything. That is, startup investors almost always have at least 1x preferences, which means they get paid back first before common stock has any value at all. Thus, if part of your compensation is common stock options, you should absolutely demand to see information from the cap table about how much investors have already put in (and remember, of course, they may always add more in later rounds). I don't know all the details of what happened with Argo.ai, but given that Ford took a $2.7 billion impairment charge, my guess is they would have never been able to sell for more than their total funding.

beambot 4y ago

Look at comps then: Aurora has a market cap of $1.6B with approximately $0.9B cash on hand ($1.1B as of 12/31, burning $200M per quarter). In short: It's trading for less than 2x cash-on-hand. Argo was underwater -- certainly not above a $1B liquidation preference.