Non-Bay Area / MCOL Base: ~170k Bonus: 15% Options: 16,000; strike price $5, FMV $10-25 somewhere (I’m guessing) Can anyone help me on if this is reasonable? What should I negotiate? Current TC ~200 already, so original offer doesn’t feel super appealing. How much more should I ask for? Series E funded, $2B+ valuation #Startup #offers #negotiating #tech #equity
May be ask the FMV first before you negotiate. 10-25 is a big range and you are just guessing.
Fair point. Thank you!
And you'll need to work there for at least 3 years to be able to exercise the options without paying a lot in taxes
Ask how many shares are outstanding and do the math on how much those options are really worth at a realistic valuation. Then set some target TC and calculate how many options you need to reach that (accounting for vesting schedule). Ask for exactly that number and don’t budge. They probably won’t budge on base/bonus but they are likely extremely flexible on options. I joined a startup without asking # of outstanding shares (the ballpark they give you is likely complete BS) and regret it massively.
Thanks for this. I really, really appreciate it.
Damn this is why I love blind. Everyday you learn something new! Thanks Roadie
Stock worth zero. A maybe bonus. Too many fall for this nonsense. It should be the 10x return investors look for over liquid equity value.
Most Series E+ end up exiting, so it’s a risk yeah, but not like seed/A/B rounds…right? Or am I being dumb? I’m probably being dumb.
Who knows, my opinion is that startups do not provide enough risk premium multiplier on options.
What's the fmv op? Otherwise your offer doesn't make sense Even at fmv 25, your looking at yearly 250k tc. It depends on your experience ofcourse if your okay with that
Hard to tell without knowing the outstanding shares.
Is this Raleigh/Durham? I may know the startup. You should try to ask for more options (upto 30k)
Yep
🙃
Whats your level? Sr software engineer? I think I might know the startup too. I think it's a decent offer for a mcol area and there is always going to be some risk when joining a startup.
Most times, private company offers at-the-money option. That is, the strike price is the fair market value of common stock. The FMV $10-25, you are referring to, my guess is it’s the FMV from the last financing round, which represents the fair market value of the preferred share, not common shares. Preferred shares are the ones VC gets. Common shares are the ones employee gets. The preferred shares will have higher FMV, because preferred shareholders will have numerous rights that common shareholders won’t have, which has value. The biggest right is liquidation preference. That is, if the company goes under and sell all their assets, preferred shares holder can tap into proceeds before common shareholders. Often times, when company goes under, common shareholders gets nothing. Remember, you need to pay $5 to convert option into shares, after vesting. Then, if company goes ipo at $9, you earn $4. If company goes under, it’s highly possible common shareholders gets nothing, and lose your $5, if you exercise the options. So one thing you need to pay attention is the post termination exercise period. The norm is 90 days. That is, after four years, you vest all your options, and decide to leave the company and company still private, you need to write a check at $5*16,000, to exercise all your options and convert into shares within 90 days. If you don’t, you lose all your options forever. Some company offers longer post termination exercise period, which are nice. The most common way to value an at-the-money option is using black-scholes model. If strike is $6, the option value will be around $3, at ballpark. Hope it helps.
I've been told at the money options were worth about 1/3rd of the "value" granted. (With 8 years to expiration, vesting over 4 years)
If you are at 200 and this is 200 plus options then that is all upside no? Usually you can negotiate stock maybe 10-20% more options.
Seems pretty standard for Sr Software eng.