Hey Blind family. I have been loving my job for the past few years at Uber, but recently went looking for a change: I want to work somewhere much smaller with greater risk (and hopefully reward)
I found one Series C whose mission speaks to me strongly and I did well on the interview too. The problem is that I only have experience with RSU offers which make it easy to evaluate TC since you can more or less just add Cash + RSU = TC
In this case, they are offering options with a strike price. In my mind, the equity portion of my offer is worth $0 on day one. Since I’m paying $1 from my pocket to get $1 worth of stock.
They are offering $200k cash and $200k stock options a year, which leads me to think that my TC is now 200k, but will be 400k if the company doubles with no equity dilution.
I kind of assumed the stock options would be quite a lot more than what an RSU offer might be since there was more risk involved and because you have to buy the shares rather than get them outright.
I know some folks on Blind understand options deeply and can probably help me better understand what to ask for and if this offer makes sense.
TC: 400k, YOE: 7
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My partner has been waiting for a decade to see a return on options he purchased. At this point, a bankruptcy would be welcome so he can take a capital loss.
@Microsoft is correct that the strike price is generally less than the fair market value. Private companies that offer shares file an annual report stating the current FMV, IRS Form 409A.
Visit the Carta website. It has a lot of good information on private shares.
One note, you can't evaluate a startup offer based on today's value. You need to get a sense of what it will be when there is an exit, that is the true value of the options you are joining the company for. Look at how many multiples of today's earnings they will be when there is a potential exit (easier for later stage startups than earlier ones) and factor that into the stock price.