Got an offer from a Series B company today. 20,000 options, 190K base, ISOs, strike price 0.76, valued today at 12.76, company valuation 2B, they expect to go public at 16B in ~5 years. 0.01% of total outstanding shares. Should I consider this? #startup #seriesb #offer Edit: 7 YOE Edit#2: I ended up rejecting the offer. Thanks for everyone’s replies!
That is a very low % for series b
Hmm, thought so. Fwiw, what is a reasonable % for 7YOE at a Series B?
At a $2B evaluation the percentage is irrelevant. This is a good offer.
A plan to go public in 5 years at 8 times the current valuation is too far out to really take credibly.
Hmmm… I think they’re getting that number from similar companies that have gone public in this space. But thanks for your reply!
Haha $16B in 5 years, talk about unlikely. Not saying it's not possible, but even if that did happen your equity would only translate to $1.6M, I'd pass. Also, are your shares subject to dilluation? If so, then cut that number by 40%, and the answer is its a trash offer. Anyone telling you different is full of shit. Way better Series B startup offers, assuming your good at your craft.
Fwiw, I calculated the percentage myself (they told me the total outstanding shares, and I just divided my share by that number to get the percentage). I think it’ll definitely be subjected to dilution because they’re going for Series C early next year, and I’m assuming any funding here on forth would involve dilution.
Expect 10-20% dilluation every round, assuming they stop raising at Series D then you can expect 20-40% dilluation . The reason I mentioned is some startups "make employees whole". You did the math right, it's just a very small equity stake. Typically you'd expect at least .03-.05%, if not far more.
Strike price should be equal to fmv of common share. That is the IRS requirement for ISO. If FMV is for preferred share, the difference is unusually large. Make sure you can get that low strike price, or it will jump up when board approves.
Hey, I’ve edited the description. What I meant by FMV is the current valuation of each share. Does my description make more sense now? Sorry for using the term FMV incorrectly.
OP, from your description FMV is 0.76 and preferred share price is 12.76. FMV is unusually low and suspicious.
Is it iso? Strike price is too low for iso. It should be the fmv of common share, usually 1/3, 1/4 of preferred share. Since preferred share is $12, I guess the strike price should at least $3 instead of $0.76.
It’s ISO for sure. Definitely didn’t get the strike price wrong, the recruiter repeated it twice. I don’t know what the preferred share value is (I asked, she said that there had been a stock split recently and she didn’t have the number), but I do know that the current valuation of the stock is 12$.
@jwkwwk - I think I should just ask them about this. I just read the tax code thanks to you, I didn’t know that the strike price should be more than or = the common stock price. Let me follow up.
The equity is too small to be meaningful and too much risks as Series B.
Yeah.. 20k too low bro. I know people who got 20k RSUs at Snowflake a few months before the IPO
Not saying that this isn’t low (which it does look by other measures), but isn’t just judging by the absolute number of shares not a good metric? I mean, that doesn’t really tell you anything without knowing the other parameters, right?
Snowflake had 277.3m shares outstanding at ipo
"Expect to go public at 16B in 5 years" lol
I mean vmware probably thinks it'll be a 300b company in 5 years... everything with a grain of salt
If there’s a different channel I should post this under, please let me know.
Yoe?
Oops, should have mentioned that in the description. 7 YOE.