How is pre IPO compensation advantageous?
Oct 28, 2021
146 Comments
I have an offer from a company that is expected to go public in a year. What are the advantages of joining a pre-IPO company with good upside over FAANG?
If I get a 500k offer (200k base + 300k stock) / year, it means the stock grant over 4 years is 1.2 million. Now if the company doubles its stock price on the day of the IPO, does it mean that my stock grant becomes 2.4 million? Essentially, *accepting* an offer a day before IPO gets me an extra 1.2 million than *accepting* it a day later. Is that understanding correct?
#equity #startup
comments
If you get options instead of rsu, you have the ability to be liquid and exercise whenever. This is advantageous for tax reasons. If you get 5 year options and giant upside like Roblox, you can basically pay very little taxes via exercising only a little or transferring those options to a holding company you control AND you get optionality to decrease downside.
Are they still giving options? It's very likely they already switched to RSUs.
Had I joined a couple of months earlier (before the last fundraising), I would have had 24x.
A few months earlier than that, when there was a stock split, I would have had twice that.
So NW is good, but could have been a lot more :)
What I donโt get (and have been afraid to ask) is doesnโt our TC plummet at the end of the grant? Wonโt everyone just leave for the next place? I must be missing something because it feels designed to make sure nobody stays more than 4 years