I have an offer from Pre-IPO company (it will IPO in 2-3 years for sure) which gives Stock Options. Since this is the first time I am thinking about taking an offer from Pre-IPO company. 1) What are the valid and genuine questions should I ask the recruiter? 2) Also since they give stock options so any questions around that I should be asking? Because I am not sure how it will work if I leave in 2-3 years. TC: 280K
What is offered TC
The important questions to ask a pre-IPO assuming it’s a real disruptor within it's space. 1-Roadmap for the company 2-Solidification of the foundation Founders, CEO and the CTO experience 3-Bootstrap or seeding capital in the horizons. This 3 questions are optimal to determining the chances of survival for a particular company.
When you get the share offer, ask them “what are the shares outstanding?” This will tell you the total amount of shares in the pool at the time. Then you take the current valuation and divide it by the shares outstanding to get the current “value” of the shares. That will help you determine what the potential value of the shares are. I.e. they offer you 10,000 shares. There are 20m shares outstanding. The last round raised was a valuation of 100m. 100m / 20m = $5 per share. Your 10,000 shares have a perceived value of $50,000.
Also ask what the strike price is. If it's worth $5 per share, but you have to pay $1 per share to exercise (strike price) it's really only worth $4 per share to you.
claiming a company “will IPO in 2-3 years for sure” is a red flag
Since it is pre IPO the stock option they offer are not real money. I think it's like a joining the school as a future career investment. If you got lucky you will make extra heck of money or you will regret. Do you ming sharing what company is this?