4 ms·

What a non-story. This is a typical way for a private company to manage who owns its stock -- namely investors, employees, and former employees. It's basically

What a non-story. This is a typical way for a private company to manage who owns its stock -- namely investors, employees, and former employees. It's basically a right of first refusal. You sell your options back to the company at the current market rate -- the rate at which that most recent investors purchased equity. That's your liquidity. The company will do this because it believes the options are undervalued compared to what they'll be worth in the future. If you don't want to do that, you hold and wait for the options to go up (or unfortunately down) in value. If the company doesn't want to buy them, you _should_ be free to sell to others. Restrictions in _those_ cases would be worth writing about.

boucher 12y ago
A right of first refusal is usually the right to buy at the same price as a third party has offered, not at some other price determined by the company.
- robbiemitchell 12y ago
  Ah, I think I meant right of first offer/negotiation. Similar to real-estate arrangements in NYC.
xtrumanx 12y ago
> You sell your options back to the company at the current market rate -- the rate at which that most recent investors purchased equity. Why should the "market rate" determined by the most recent round of investments? A lot could have changed since then. > If the company doesn't want to buy them, you _should_ be free to sell to others. Restrictions in _those_ cases would be worth writing about. The issue isn't having to sell back to Uber but having to sell it at Uber's price.
- robbiemitchell 12y ago
  It's true that a lot could have changed since the previous investment round, but isn't that often the case in venture capital funding? Paying a different price for one person's equity changes the valuation for everyone as the new market rate. This can be bad for an individual (could be sold for higher on private market) but also good (prevents someone else from selling at a major discount). Companies want to control valuation much more closely than that, so valuation is pegged to investment or some other major event. Whether that's a good way to do things would be a nice discussion topic, but that's not the same as saying uber in particular is playing hardball. A little bit of research would reveal that it's standard practice.

boucher 12y ago

A right of first refusal is usually the right to buy at the same price as a third party has offered, not at some other price determined by the company.

robbiemitchell 12y ago
Ah, I think I meant right of first offer/negotiation. Similar to real-estate arrangements in NYC.

xtrumanx 12y ago

> You sell your options back to the company at the current market rate -- the rate at which that most recent investors purchased equity. Why should the "market rate" determined by the most recent round of investments? A lot could have changed since then. > If the company doesn't want to buy them, you _should_ be free to sell to others. Restrictions in _those_ cases would be worth writing about. The issue isn't having to sell back to Uber but having to sell it at Uber's price.

robbiemitchell 12y ago
It's true that a lot could have changed since the previous investment round, but isn't that often the case in venture capital funding? Paying a different price for one person's equity changes the valuation for everyone as the new market rate. This can be bad for an individual (could be sold for higher on private market) but also good (prevents someone else from selling at a major discount). Companies want to control valuation much more closely than that, so valuation is pegged to investment or some other major event. Whether that's a good way to do things would be a nice discussion topic, but that's not the same as saying uber in particular is playing hardball. A little bit of research would reveal that it's standard practice.