Series C startup - stock options evaluation.
Hi blind, How is 25000 stock options for a $500M series C startup with $2 strick price. Company is a fintech.
25000 options at $2 = 5M?
I didn’t get this calculation?
Microsoft has clearly no idea how options or math work 😂 what’s the current FMV of the shares? Otherwise there’s no way for you to know how much the equity grant is worth but for that you need to know the number of outstanding shares. Also read up on liquidation preference.
The value of an option is the difference between the option strike price and the preferred share price (what investors paid). Example: Option strike price: $2 Preferred share price: $3 Value of an option: $1 The hope is that the preferred share price will increase over time. The strike price will stay the same, so the value of an option should increase. The recruiter should tell you the preferred share price if you ask.
But with this how would you find out total worth of options with respect to company’s total valuation.
Rough calculation: Valuation/preferred share price = total number of shares But at this stage your % ownership doesn’t matter very much. What matters is the current value of your options and the potential future value. That calculation is simply: (Preferred share price) - (option strike price) = option value
FYI: When you “exercise” an option, you purchase a share at the strike price. For example, if your startup goes public, you can exercise your option to buy 25,000 shares for $2 each. If the share price on the NASDAQ is $10, you have made an instant profit of $200,000.
OP, were you able to negotiate or take the offer?
it depends on how many shares outstanding there are. do you own 0.1% or 0.01%? the number of options is meaningless.
I shall ask that to the recruiter, they just told me the above mentioned information. Is there a way we can find this information somewhere? 409a didn’t mention number of shares outstanding.
500M at 2 means 200M shares outstanding?