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The 'Outside Investment' number here in the 'Optional' section actually only matters if (A) the equity is participating preferred [1] or (B) the company sells f
by jamiequint 14y ago
The 'Outside Investment' number here in the 'Optional' section actually only matters if (A) the equity is participating preferred [1] or (B) the company sells for less than the preference would normally receive on a pro-rata basis.
In 99.9% of the situations where a non-founder gets 'FU Money' (B) will not be the case, and (A) is increasingly rare.
[1] http://www.startupcompanylawyer.com/2007/06/15/what-is-the-difference-between-non-participating-preferred-stock-and-participating-preferred-stock/ http://www.startupcompanylawyer.com/2007/06/15/what-is-the-d...
- brudgers 14y agoI made the tool after a succession of "Ask HN: Is this a good deal" where equity was in the low single digits. It's crude. The optional numbers were included because the way deals have and will be structured matters. Most people don't ask about these things before they post a question to HN. Deals are structured all kinds of ways. How many times has someone posted about getting rid of a partner whose equity vested immediately? Even the article talks about 200,000 shares as if that means something. It could be 20% ownership. It could be 0.02%.