Hi I am thinking to go to a pre IPO company e.g Airbnb, doordash, robinhood, etc. However can someone working over there explain me what is the formula to convert the initial 4 year equity (say 1M) to the number of stocks. How does it vest and how does it relate to when the company goes public. Thanks #airbnb #doordash #robinhood
Whatever # of shares has vested at IPO time you can sell after a lockout period (usually 4-6 months) Some companies offer forward vesting, eg at IPO time some or all of your equity vests Normal tax rules apply, so when RSUs vest you have to pay taxes on them. This can be annoying for privately held companies since it’s not usually easy to sell while private
Super helpful, thank you!
The main point of my question is how do you convert equity (dollar amount ) to number of stocks
RSUs are typically double trigger which means you only receive the shares after both triggers. One trigger is time (vesting period) and second trigger is an IPO or exit event. A company will either provide on the offer letter a number of shares or a dollar amount. The unknown variable can be calculated using, typically, the last funding round (or 409a valuation depending on how comp works at your company. Best to ask). For example, if company is valued at 1bill and you receive 10,000 shares you can impute $100,000 value of those shares.Alternatively if you receive $100k you impute the 10,000 shares given). Best question to ask is what valuation are they using. Last funding round or 409A
If someone own the startup RSU and he/she needs to sell them what’s the chance he/she can cash them out when company is not IPO yet ?
You don’t own the RSUs until the IPO (double trigger event). You may be able to trade Options before an IPO on a secondary market but I am not too sure
What happen if the IPO doesn’t happen and the company get acquired ? I believe I will be/she will own the RSU but it will not be investable, right ?
Wondering as well, and if a pre-ipo company offers you RSUs and they vest before the company IPOs, can you sell them somehow?
Yeah it’s your property. you can sell to a friend or on a private market like EquityZen, or back to the company
Sharespost told me pre-IPO RSUs can’t be sold, only options.