Curious to hear success/failure stories on how option valuation packages played out for employees after several funding rounds. Specifically: - What signal to infer from large difference in 409a valuation vs preferred price? I see some companies with with preferred price values 3-4x above 409a. - given the above, would you want more options with a smaller difference or fewer options with a greater spread, that may not have the same multiple in exit growth? - How much trust do you put in the targeted valuation? Most seem to hone in around 9-11x. Obviously lots of factors here but figure later stages should have a clear hypothesis for success here.
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Donโt trust the companyโs target exit valuation - make your own estimate. Ask for revenue and growth rate. Evaluate whether itโs sustainable (how do retention, csat, nps, margins look? is growth rate slowing down?) 3x 409a to preferred is normal for C, and the gap will shrink from there. Low 409a is good for employees (low strike price & low taxes when you exercise)