I have no idea how employee comp works when startups get acquired. They were valued at ~$70M, acquired for ~$210M. Let’s say an employee joined after their most recent funding round and got $100K in equity. Since they got acquired at 3X their last round does that mean the equity in this example is worth $300k roughly? ie can you guessimate how much employees make in an acquisition by looking at the multiple of their exit compared to their current valuation?
Health & Wellness
Yesterday
1267
Low Testosterone
Ask Blinders
14h
590
Why no one cares about the lives lost in Gaza, Israel and busy in their own lives?
2024 Presidential Election
Yesterday
262
You get what you vote for
India
8h
695
Rahul Gandhi is poison but the people who believe in him are a lot worse
Tech Industry
14h
556
Why is chatgpt so dumb
It spends on investors liquidation preference multiples and participation. Their last round B is $20M. Say if VC has 3x preference and also participation. B round VC will take $60M out of $210M. A round and angels will probably take out $25M ($8.5M x 3) And then they will share with everyone else in the remaining $65M. So your friend with $100K joining after B is about 0.0014%. He will make 0.0014% * $65M = 91K. Yes he actually takes home less than 100K in this scenario. You really need a 10X exit to have some meaningful outcome, sadly. Alternatively you need to get a very good VC terms to have smaller liquidation preferences. If it’s 2X liquidation preference, then he will make about $214K. So it varies from case to case.
very helpful answer! thanks. i was thinking the same thing - that you need a 10X exit for meaningful outcome. pretty rare/high bar
are there standard equity packages for employees? eg first 2-3 engineers typically get 1%, later stage marketing employees get .05% etc