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> There are a few warnings that go along with working for equity. Another warning: Equity can be expensive. It can cost a lot of money to keep that equity whe

by cj 12y ago

> There are a few warnings that go along with working for equity. Another warning: Equity can be expensive. It can cost a lot of money to keep that equity when you leave the startup. I was at a startup for 2 years and had 2% vested equity. I left the company 2 months ago. If I want to keep my equity, I have to exercise my stock options and pay ~$30k within the next month. If I don't, the equity disappears forever.

bcbrown 12y ago
Plus the tax bill on the difference in value from option issue date to option exercise date.
drewvolpe 12y ago
There's a third option: you can sell some or all of your equity to an investor. Companies don't like to talk about them, but I've seen more and more of these transactions happening, and they can be great for everyone involved: the employee gets a payday and eliminates her risk, and the investor gets access to a company she would not have otherwise been able to.
- cperciva 12y ago
  Don't rules about sales needing to be approved by the board block such transactions?
  - siberianbear 12y ago
    When I bought my options at a pre-IPO startup, my agreement was that the board had a "first right repurchase," not a block. So if I were (for instance) to sell you my shares for $10, the company would have the right to buy them at the same price instead. Perhaps there are other types of agreements out there, and therefore YMMV.
ryanSrich 12y ago
If the startup is doing well you'll have no problem finding an angel to finance those options for you.
StavrosK 12y ago
Is that because the stock hasn't vested?
- Blackthorn 12y ago
  No, it's because options are completely shitty for employees (whereas they're great for the company).
- jordanthoms 12y ago
  It's because almost all the time you are actually issued options, not shares. The options allow you to buy a certain number of shares at a lower price, but you need to pay that price to exercise them.
jackowayed 12y ago
Definitely worth looking into http://esofund.com/ http://esofund.com/

by cj 12y ago

bcbrown 12y ago

Plus the tax bill on the difference in value from option issue date to option exercise date.

drewvolpe 12y ago

There's a third option: you can sell some or all of your equity to an investor. Companies don't like to talk about them, but I've seen more and more of these transactions happening, and they can be great for everyone involved: the employee gets a payday and eliminates her risk, and the investor gets access to a company she would not have otherwise been able to.

cperciva 12y ago
Don't rules about sales needing to be approved by the board block such transactions?
- siberianbear 12y ago
  When I bought my options at a pre-IPO startup, my agreement was that the board had a "first right repurchase," not a block. So if I were (for instance) to sell you my shares for $10, the company would have the right to buy them at the same price instead. Perhaps there are other types of agreements out there, and therefore YMMV.

ryanSrich 12y ago

If the startup is doing well you'll have no problem finding an angel to finance those options for you.

StavrosK 12y ago

Is that because the stock hasn't vested?

Blackthorn 12y ago
No, it's because options are completely shitty for employees (whereas they're great for the company).
jordanthoms 12y ago
It's because almost all the time you are actually issued options, not shares. The options allow you to buy a certain number of shares at a lower price, but you need to pay that price to exercise them.

jackowayed 12y ago

Definitely worth looking into http://esofund.com/ http://esofund.com/