Incentive Stock Options value
Is it worth joining early stage startup with giving up cash value at current company. Example current TC at Cisco approx 220k 10 yoe Offer from start up: 150k + stock options worth 100k (based on their current valuation) Their product is in stealth mode, and very early stage. Does those stock options mean anything?
No they don’t. At that point you’re not even thinking IPO you’re hoping for acquisition and anything can happen in that scenario. Options at a start up that early is the definition of Monopoly money
assign a 10% probability of success to the options. 100k*0.1 gets you 10k over 4 years expected value
The stock options are most likely worthless. Value them at the likelihood of an exit or IPO.
"options worth 100k" would cost you 100k to exercise, and when you did, they would be worth 100k. That would is a net zero gain to you as it stands. The hope is that they'll be worth more at some point in the future when they are liquid, but odds are strong they'll be worthless before they are liquid.
the 100k is the supposed market value not the exercise cost
It's literally illegal to offer options at less than the current valuation. errfileno is spot on.
Please explain what you mean by 100k worth of options, Is that the difference between common stock and preferred stock price? If you're multiplying grant price by grant size to arrive at 100k, that is wrong. Options are worth something only if the stock price rises above the grant price
Someone in company gave over view of thats their current stock price market value is. Based on that they said every year i will be getting 100k value worth stock.
OP it looks like you don't fully understand equity compensation. You should read this doc so you can understand what you're being offered: https://github.com/jlevy/og-equity-compensation
financially, no it’s not worth it
No, it’s a lottery ticket