If revenue is not revealed, how can I evaluate if option will become paper money?
Got an SWE offer from a startup in SF. TC includes 10000 share (options) over 4 years. I am wondering how can I get an estimation? Strike price is somewhere $1.5. Company finished Series D and plans to IPO in the next 2~3 year, may raise Series E. Please help or ask question, I will do my best to answer.
Ask for last round valuation price per share, multiply by your shares, that’s your paper money value today.
Can I ask that? (wondering what if they feel offended then rescind my offer) And will that number be close to IPO price? (preferred price?)
If they get offended by a question like this you should probably reconsider whether you want to work there. As for IPO price, who knows. This is largely a function of how the market and company does between now and ipo. Look no further than Uber and Lyft to see how this can fall flat.
Assume all options are always worth zero
Nahh...so basically you are implying me decline that offer?
No. You should decide whether or not to take that offer while assumig the equity will be worth nothing. Overwhelming majority of startups fail. And, depending on what the cap table looks like, even if the company has an exit event, VCs may take all the money. The options might be worth something some day but the risk is very high and so the only safe assumption to make id that they won't be worth anything
People valuate company differently. You can do multiple of revenue or profit. If those numbers are not given, maybe ask for 409a valuation (?)
you mean the section under TAX stuff?
Don't work for startups and you won't have to worry about it.. there are no tangible benefits.
I am still actively interviewing other companies with RSU...but if this one is really good then I might just accept this offer.
Cool hope you didn't plan on having a life outside work for the next few years
If the TC good excluding the equity?
No. Pretty average.
If they won’t tell you revenue growth confidentially don’t join
So you mean I can ask for 'the growth' instead of total revenue?
Revenue and growth is meaningless for a software engineer deciding on job offer. What you need is the valuation per share that the last round was raised at.
At startup you should assume shares are worth $0. If you really believe in it, then you should ask for the pct of shares out of all outstanding shares. I can help you determine fair pct based on number of hire you are and current stability of startup
Assuming it’s worth 0 from family expense planning sure. Assuming it’s worth 0 when computing the EV of compensation of the job offer, well we know that’s going to be inaccurate, even thought it’s potentially the mode.
IIRC it is 0.5%~0.7%, yet if they raise a Series E, the number will be diluted. There are some 150 ppl.
Ask for 409a valuation and what % of company your options represent. That’s what matters. They don’t need to provide revenue
Shouldn't they give you a dollar number instead of the number of shares?
In the offer letter they only mentioned the amount of shares.
RSUs or options?