How are stock grants calculated at startups?
I have an offer from a startup. I am getting 600k worth of stocks. They arrived at that value with an internal assessment. But according to their last raise, it turns out to be just 200k which is pretty low. So wanted to know if this is a normal way of calculating the grant. Startup is in pre-ipo state so grant seems pretty good to me. Current tc: 220k Yoe: 4 years
You need to share more information..like the company name and their current valuation..
Can't share the name. But the valuation they are assuming is around 3B
Should be based on their 409A. Ask your recruiter to share their most recent 409A valuation
But the difference is quite brutal from $600k to $200k... were they internally too optimistic and the new valuation round decreased the company’s value? I’m also thinking, shouldn’t your grant value stay always the same but the number of shares granted change depending on the valuation?
There won't be a new valuation round. According to them, it would be an ipo only now(I do believe this because last raise was significantly large).
It’s from quarterly board approval after you join the company at last 409A valuation. If there is a new round in between you joining and next board approval then it can go round but seems a little shady... if you are diluted in shares the total value of company should have went up to offset it unless it’s a down round
No matter what kind of evaluation you look at, I’d advice to keep your expectations low and not let those numbers be the major reason for accepting/rejecting the offer. Anything that you make from those options should be considered a bonus.
How long ago was the last raise?
1.5 years ago
Hmm. It’s plausible. Do they have any metrics to back this new valuation?