Startup equity is like a shitty lottery ticket that you most likely won't be able to cash out even if you get lucky.
I passed up on google to be one of the first employees at a promising startup that ended up raising high 8 figures and is now at nearly 100 employees. I took a pay cut for that equity and worked 12 hour days alongside the founders. With liquidation preferences and dilution I won't even be able to take a vacation with that equity if there's ever an exit.
My college friends who picked Google are now making >$300K and have enough money in the bank to have a diversified portfolio and acquire the right type of equity.
So unless you're a founder or an investor ignore the equity. You can still go for a startup but do it for the experience and potential to have a real impact on an organization.
Hi, could you share a bit more the numbers on how you ended up with so little? In particular, what percentage did you initially have? What percentage did you have in the end? What was the liquidation factor? Was the business in general successful or did it have to accept compromises like raising with unfavorable conditions to survive?
I am at the 5th year in a growing startup where I was employee < 10 with initially 1.5% which became ~0.8% after 3 rounds of funding (~60M$) all at liquidation preference 1. The startup is now 150 employees and valued ~200M. Equity has been painfully exercised so I can both leave if needed, as well as her long term capital gain one day (or should I say capital loss?)
So unless you're a founder or an investor ignore the equity
2 years ago I would have told you you’re full of shit, but I’ve since been through this myself, and I can confirm: this is 100% right. Even in the unlikely event the startup exits, and even more unlikely event that it exits at $100M+, typical non-founder stakes do not offset the partial loss of cash and RSU income, particularly when one factors dilution and liquidation preferences into account. Took me 2 years to snap out of it. Never again.
Hi, could you share a bit more the numbers on how you ended up with so little? In particular, what percentage did you initially have? What percentage did you have in the end? What was the liquidation factor? Was the business in general successful or did it have to accept compromises like raising with unfavorable conditions to survive?
I am at the 5th year in a growing startup where I was employee < 10 with initially 1.5% which became ~0.8% after 3 rounds of funding (~60M$) all at liquidation preference 1. The startup is now 150 employees and valued ~200M. Equity has been painfully exercised so I can both leave if needed, as well as her long term capital gain one day (or should I say capital loss?)
Comments
Startup equity is like a shitty lottery ticket that you most likely won't be able to cash out even if you get lucky.
I passed up on google to be one of the first employees at a promising startup that ended up raising high 8 figures and is now at nearly 100 employees. I took a pay cut for that equity and worked 12 hour days alongside the founders. With liquidation preferences and dilution I won't even be able to take a vacation with that equity if there's ever an exit.
My college friends who picked Google are now making >$300K and have enough money in the bank to have a diversified portfolio and acquire the right type of equity.
So unless you're a founder or an investor ignore the equity. You can still go for a startup but do it for the experience and potential to have a real impact on an organization.
Hi, could you share a bit more the numbers on how you ended up with so little? In particular, what percentage did you initially have? What percentage did you have in the end? What was the liquidation factor? Was the business in general successful or did it have to accept compromises like raising with unfavorable conditions to survive?
I am at the 5th year in a growing startup where I was employee < 10 with initially 1.5% which became ~0.8% after 3 rounds of funding (~60M$) all at liquidation preference 1. The startup is now 150 employees and valued ~200M. Equity has been painfully exercised so I can both leave if needed, as well as her long term capital gain one day (or should I say capital loss?)
Thanks
2 years ago I would have told you you’re full of shit, but I’ve since been through this myself, and I can confirm: this is 100% right. Even in the unlikely event the startup exits, and even more unlikely event that it exits at $100M+, typical non-founder stakes do not offset the partial loss of cash and RSU income, particularly when one factors dilution and liquidation preferences into account. Took me 2 years to snap out of it. Never again.
Hi, could you share a bit more the numbers on how you ended up with so little? In particular, what percentage did you initially have? What percentage did you have in the end? What was the liquidation factor? Was the business in general successful or did it have to accept compromises like raising with unfavorable conditions to survive?
I am at the 5th year in a growing startup where I was employee < 10 with initially 1.5% which became ~0.8% after 3 rounds of funding (~60M$) all at liquidation preference 1. The startup is now 150 employees and valued ~200M. Equity has been painfully exercised so I can both leave if needed, as well as her long term capital gain one day (or should I say capital loss?)
Thanks