What should you consider before joining a "unicorn"? I was approached by a startup that has recently achieved unicorn status (can't reveal name to avoid doxxing). Their base salary is slightly lower that what I'm currently getting at Meta, but there will also be equity. My main question is: at which point will I be able to sell? Is it only in the case of an IPO ? Are there any other opportunities to sell? E.g. if the startup gets bought, if there is a next funding round, or if you leave the company. Basically, I'm trying to understand if it is simply a big bet that would materialize only upon IPO or if there are any other opportunities for cashing in Thanks! #equity #startup
Hi I currently work at TikTok (preipo with buyback) and just accepted a unicorn offer that's quite option heavy. For TikTok, I had RSUs that I can sell (albeit slowly) at buyback events. For this new offer, they are much younger/smaller, but still worth a few $Billion, and my understanding is they try to hold annual buybacks. Based on their positioning and the opportunity for liquidity, I'm quite happy. It still is a risk but I'm young and want to grow. You should take the time to ask their team. The recruiter should be knowledgeable. If it's barely unicorn, likely no immediate buybacks. It may be influenced by their cash on hand, and their cash flow (if they are still cash flow negative, little chance of buyback) The other thing is, even if they have had liquidity events (e.g. buyback) in the past, there's no guarantee - it's always a risk. I negotiated for a salary that's basically the same as what I make now. The only difference is TikTok has an annual bonus, so my cash comp is decreasing. But even if I never get money from stock, I can live a lifestyle I am happy with
Thanks ByteDance!
I personally wouldn’t consider the stock options anything close the value of your RSUs given they require a liquidity event to exercise that may not happen. If you find the company stocks can be traded on secondary markets or has other buyback programs that could help the case. If you ever leave keep in mind you have to buy the options out to keep them incurring a large expense when you might be in a less financially certain situation while changing jobs. At that point you also might not be looking to invest large sums of money in a company you are leaving. The average age in the last few years has been 12 years when companies have gone public so you might be waiting awhile for your payout if it ever happens.
I second this. One thing you can check is try to create an account on sites that allow to sell pre IPO stocks, create an account, mention there you're an employee of this startup and see what the site tells you about the policy of selling stocks of that company on their platform. In the case of my friend who worked at a startup, they basically tried to sell their equity on pre IPO market and found out that the company had rules that they need to contact startup first and can sell on the platform only if the startup CEO approves it. The friend couldn't do it as they had left the startup after huge issues with the CEO who was out to get them. So might be worth finding these T&Cs out (without asking the company directly before you join).
Thanks guys, great tips
Most startup employees never see a dime from their stock. Out of 3 startups I’ve worked for I’ve only seen rewards from 1. I wouldn’t make that move unless they’re offering you something massive like 1% of the company.
1% is massive?
Thanks! In my case, getting 1% of a startup valued at 1b doesn't seem very plausible :)
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Real question you should be asking is how much is that equity worth. It’s paper money till there’s a way to sell it which could be in the form of ipo, company being bought or company hosting buy events (like byte dance does)
Yeah that's what I'm trying to assess. How frequent are these opportunities to sell in the wild
You don’t want to tell the offer or the company name and expect help - no one can with what you posted