$1 cash worth of pre-ipo equity
it is a startup makes money, raised a recent round D or E. I am seeking a ratio. For 1 dollar as cash how much pre-ipo equity is fair.
From what I've learned, the simplest thing to do is ask for double the shares that they offer you. Maybe triple if you have it in you. Otherwise you can attempt to ask them what percentage of shares you are receiving to try and weight how much they will be worth later if the company is successful. The thing about private shares is that you are going in mostly blind unless you get in on the ground floor or come in after a few years at a director level or above. Long term, absolutely push for more shares at every promotion or opportunity you can. You will regret it if you don't.
Current valuation is around 3b. I will give away my current bonus most probably, around 55k. They will try to match my base salary. It is a senior level position. I don’t know much about how much equity I should expect. The company resembles FB more than Uber or Wework. They make around 100m per year currently.
Do you have any indication of how much a share will be worth after IPO? Best case vs worst case by looking at similar companies in a similar industry? Pretend it will be worth 10x the worst case. What would you do?
I think target is being somewhere between 15b to 30b. However it is at least 2-3 years away. Goal is to make 1b revenue in 4 years. 10x is like best case for initial valuation after IPO.
If they're giving you a target number, eg say $200k split it however you want, take the cash
Can you elaborate what you mean? Of course cash is preferred, but if you believe in company you might prefer, instead of 50k, 200k stock. I convert 1 to 4
Growth potential is BS when looking at moving funding rounds. That share price is going to go up regardless if they’re doing active funding rounds. If you believe in the company hold it after IPO, if you don’t, dump it and take the quick money from your private equity gains.
Well you are assuming there will be no down round. We have been seeing quite a few down rounds recently. I agree with your overall conclusion though.
For the most part yes, but down rounds are rare, and if you get in early it doesn’t matter.
This is too generic question. A lot of it depends on the growth potential. Let me give you an example: When fb went public, they had a very successful product that was known well across the world. This would be close to 1:2 (my 1 dollar in cash is worth 2 $ in the stock) although this number is pulled without any rigor. For company such as Uber , it's lower than that probably (1:4) since we all know they bleed a lot of money (but at a scale that's very very high compared to what FB was when it IPOed). Also, it's still not clear whether they can sustain business outside of those k cities where they are cash flow positive at this point. Also regulatory hurdles at a higher pain point than FB at equivalent growth position. So no, unless we know - 1) company what it does, who are its competitors 2) what's their cash flow or of the industry they are in 3) what is their unique selling point. 4) how is their projected growth. Your question can't be answered at all.