I finished my interviews with coalition inc. I wasn’t told yet on how much equity will be offered to me but I’m trying to understand how a start up Pre-IPO would offer RSUs and generally what that would mean? This is my first time interviewing with a start up and not sure exactly how RSUs work at start ups Thanks #coalition #dataanalytics #equity #rsu
holloway guide
Not a small start up but I think concept is similar…. Got an offer from stripe last year that I declined, but it was pretty much the similar to any other RSU plan, the only thing is that to cash out I’d need to wait for a liquidity event such as IPO or a new investor coming in and have the chance to sell, but that second option seemed kind of rare and unlikely. SpaceX and some other big start ups have annual liquidity events where you can simply sell them back, not sure how that works. You’d have to ask
Is the 2nd option really that rare? I thought secondary sales were not uncommon, especially at unicorn status companies that were poised to IPO. Or maybe that was when the good old money printer was going brrrrr
Well as I didn’t join and don’t know anyone there can’t comment on frequency, but the recruiter told me that it wasn’t like other private companies where they have fixed liquidity days every year, it had to be a truly not long term planned liquidity event happening… maybe it happens every year maybe it doesn’t happen ever, cant tell. Maybe someone from stripe can chime in lol
Pre-IPO companies typically give out stock options, not RSU’s. They give you an amount of options at a specific strike price based on their valuation. As the company grows and you get more options, the strike price goes up. If you have vested options and you leave the company, you have the “option” to purchase your options at the strike price you got them at. RSU’s are owned by you when they vest, options need to be purchased upon vesting to own them.
pre ipo is a specific term that means companies close to IPO. like how pre teen doesn’t include toddlers. they almost always give RSU because at that point options are financially unattractive
Yeah I’d rather have a start up RSU than option a million times, chances of making money are significantly higher. VCs and investors with FOMO inflate those valuation that then the open market can’t justify.
If those are ISOs then it’s just wishful thinking to believe there’s any payout in the future. Research liquidity preference for example.
Most series b and earlier give options... RSU are used when the strike price becomes to high to be affordable... It's better to get option since at least you own something but it's higher risk... With RSU you have lower risk but the double trigger means you are stuck with company unless liquidity event happens.... In a nutshell,. Plan to take cash hit and try to be optimistic about the paper money which is likely to be useless... Dont go to startup to make money
Any company can just give you equity, but as others have mentioned startups generally grants options instead of straight stock. Depending on how mature the startup is, the strike price can be pennies per share or dollars. The general rule, though, is that unless you're a founder or, like, employee #1, you're unlikely to make much on your shares unless the company has a phenomenal exit. If I were you (and I've been through this before ... my startup stock ended up being completely worthless when they were sold for pennies on the dollar) I'd focus on negotiating more salary and not worry too much about options.
OP what offer did you get? and yoe?
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Did they explicitly say RSUs? If they did then most likely it's double trigger. Once when they vest, and once on liquidation event. Which essentially means you're not taxed until the second trigger.
Ah, they mentioned equity. I assumed its RSU. What questions do I need to ask to know what exactly they’re offering. This is a new concept to me and I’m not sure what info to ask
If they aren't offering RSU, you'll most likely get NSO or ISOs. Essentially you would need to pay the FMV and taxes the difference of the strike price and the FMV.