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How did lose all their equity? You can’t declare equity is worthless. You can raise new rounds with different valuations and dilute previous investors/employ
by adrr 2y ago
How did lose all their equity? You can’t declare equity is worthless. You can raise new rounds with different valuations and dilute previous investors/employees but they would also dilute themselves.
- rahimnathwani 2y agoGoogle 'drag along rights'.
- hobofan 2y agoEven if they don't "lose" their equity, it might just turn essentially worthless. Very often "equity" founding staff receives is in the form of (V)ESOP s = (virtual) employee stock options, or other equity grants that only materialize in the case of an "exit event". Depending on how the exit events are specified in the contract, the founder taking the company private (/ divestment from the investors) might have resulted in an exit event with $1 value of the company.
- beefnugs 2y agoYeah so pure grift : if it was really dying then just keep your worthless-percent forever, or get emotionally manipulated into selling for $1 like a sucker
- bigtunacan 2y agoEquity for pre-IPO companies is often tied to an expiration. If there is no qualifying liquidity event before the expiration then your equity disappears unless the company takes action to reissue your equity. That sometimes happens for people who are still employed with the company, but almost never for former employees.
- Aurornis 2y ago> You can’t declare equity is worthless. You can raise new rounds with different valuations and dilute previous investors/employees but they would also dilute themselves. The investors sold the company back to the founder for $1. That's as close as it gets to declaring equity as worthless.