It's nice to offer liquidity to employees before an acquisition/IPO event, but the "equity value" section sounds a lot like a 409a valuation which is typically a conservative valuation of the company in my experience. I'm not convinced employees will get a very good deal on their shares by selling early rather than waiting for an IPO. It's therefore not surprising that the parent company (GM) is so willing to commit to purchasing these shares, because it seems they're basically getting a discounted buy-back.
Which I think is fair. Having liquidity for employees of private companies is important and something that is very lacking currently. Right now it seems like your options are risk joining a Series A/B/C/etc company and potentially have to wait 5-7+ years while being fully illiquid the whole time and hoping they IPO or get acquired otherwise all your equity is useless. Or join a public company that typically has a 1 year cliff and then quarterly vests of RSU's that are much more liquid.
I'm seeing a lot of early stage startups offer much higher base salaries to compete with the big tech companies that can give out RSU's and this skew in the long run I feel hurts employees more than companies. So I think this levels the playing field a little bit.
Comments
It's nice to offer liquidity to employees before an acquisition/IPO event, but the "equity value" section sounds a lot like a 409a valuation which is typically a conservative valuation of the company in my experience. I'm not convinced employees will get a very good deal on their shares by selling early rather than waiting for an IPO. It's therefore not surprising that the parent company (GM) is so willing to commit to purchasing these shares, because it seems they're basically getting a discounted buy-back.
Which I think is fair. Having liquidity for employees of private companies is important and something that is very lacking currently. Right now it seems like your options are risk joining a Series A/B/C/etc company and potentially have to wait 5-7+ years while being fully illiquid the whole time and hoping they IPO or get acquired otherwise all your equity is useless. Or join a public company that typically has a 1 year cliff and then quarterly vests of RSU's that are much more liquid.
I'm seeing a lot of early stage startups offer much higher base salaries to compete with the big tech companies that can give out RSU's and this skew in the long run I feel hurts employees more than companies. So I think this levels the playing field a little bit.