Do you know how many shares are outstanding, i.e., what % of the company you'd be getting?
Moreover, you should absolutely ask for the preferred price at the last fundraise. They should be able to give you that figure, just like they gave you the strike price.
Also ask about liquidation preferences: do investors get paid out at a multiple?
Finally, you should adjust that figure depending on how long ago the raise was. A 2021 valuation is very very different from a 2022 and 2023 valuation.
Once you have all of these figures, you can build yourself a probability-weighted model that factors in dilution and a few different outcomes (company ends up being worth nothing, company gets sold to PE at some small multiple, company has an IPO etc) come up with an expected value for the worth of your equity.
If you'd like, email me, and I'll share a redacted version of the model I give my employees at interviewing.io to do some reasoning about the value of their equity: aline@interviewing.io
P.S. Odds are that this equity is going to be monopoly money (because that's true for every company)... and odds are your stake is very small even if it's not because you're coming in late.
Even with all that information, my understanding is the possibility remains that upon acquisition, shares are not necessarily worth anything. Even if the acquisition price is beyond the liquidation preferences, the terms of acquisition can still override whatever "value" your stock options may or may not have.
The fact of the matter is, as a line level employee, you have no leverage and no influence on your exit outcome. The only reasonable assumption is that your shares are worth $0, unless you have something in writing that says otherwise.
I think IPO is more straightforward, and presents a better opportunity to see some reward. But post-IPO lockup is usually 6 months?
Comments
Do you know how many shares are outstanding, i.e., what % of the company you'd be getting?
Moreover, you should absolutely ask for the preferred price at the last fundraise. They should be able to give you that figure, just like they gave you the strike price.
Also ask about liquidation preferences: do investors get paid out at a multiple?
Finally, you should adjust that figure depending on how long ago the raise was. A 2021 valuation is very very different from a 2022 and 2023 valuation.
Once you have all of these figures, you can build yourself a probability-weighted model that factors in dilution and a few different outcomes (company ends up being worth nothing, company gets sold to PE at some small multiple, company has an IPO etc) come up with an expected value for the worth of your equity.
If you'd like, email me, and I'll share a redacted version of the model I give my employees at interviewing.io to do some reasoning about the value of their equity: aline@interviewing.io
P.S. Odds are that this equity is going to be monopoly money (because that's true for every company)... and odds are your stake is very small even if it's not because you're coming in late.
Even with all that information, my understanding is the possibility remains that upon acquisition, shares are not necessarily worth anything. Even if the acquisition price is beyond the liquidation preferences, the terms of acquisition can still override whatever "value" your stock options may or may not have.
The fact of the matter is, as a line level employee, you have no leverage and no influence on your exit outcome. The only reasonable assumption is that your shares are worth $0, unless you have something in writing that says otherwise.
I think IPO is more straightforward, and presents a better opportunity to see some reward. But post-IPO lockup is usually 6 months?