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I found out that a company I worked at previously is IPOing. I have like ~20k share options that I have vested and exercised shortly before I left. I know there's been several rounds of funding since, and thus, the % I own of the company has been diluted, but does that mean that once the lockup period is over, I am able to sell all ~20k shares on the open market? I have friends still at the company saying that they were thinking the total number of employee shares will get dropped by 5-10x because of dilution (i.e., I will only have 2-4k shares), but that doesn't seem right.
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Mar 22, 2024 21:24
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| # ¿ May 12, 2024 05:28 |
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Baddog posted:Depends on how it's run. You're going to get diluted, but usually that's through them issuing more shares, not dividing yours. Yeah, that's what I thought. Motronic posted:An a lot of annswers to a lot of questions is going to be in the equity agreement you signed when exercising those options. I'd suggest you go find it. Thanks. I'll try and find it and dig it up. Talking to people, it seems like it's a reverse split before the IPO event. I think that makes more sense and might completely screw over every employee at the company. I'm so glad/grateful the negotiation thread told me salary over stock now!
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Mar 22, 2024 21:48
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Motronic posted:Why would a reverse split "completely screw over" anyone? 10 shares worth $1 each is the same thing as 5 shares worth $2 each. I guess they feel screwed over in the sense that they thought they were going to be millionaires overnight since the company had issued a lot of stock. I left ~50k options on the table because I left early. I was told that if an IPO happens, average price would be ~10-15 so maybe 500-750k. I didn't realize (and many of the other employees) didn't take into account that a reverse split could/would occur to get to that price. I know during my time there management never talked about it, just about the number of shares issued. This was the first company that I and many of the current employees ever worked at that IPO'ed but I finally understand how all this math works. It makes me realize that the stock options I have now at my new pre-IPO company is decent, but not a six figure payout (200k shares, but total exercise price is 100k at ~$0.50 a share). EDIT: I realize now that the misconception is pretty pervasive. The recruiter for my current company told me that I would get large equity (~200k shares) and if they IPO, the shares would be worth $10-15 each. Either he doesn't know how it works (possible, but I assume it's a recruiter's job to know about compensation) or he knows most people with little industry experience doesn't know how it works, which is probably true because everyone at my first company was all from academia and it was their first industry job. just_a_person fucked around with this message at 22:16 on Mar 22, 2024 |
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Mar 22, 2024 22:08
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Baddog posted:Yah it's this unfortunately. You can sometimes negotiate to get the class of shares with more rights (try to get the same class that the founders have, hah). Yeah, I guess what threw me off was my original strike price was ~ 0.10 cents when I first joined (employee #7). By the time we hit second round of funding, our valuation went to ~$1.50 a share but I left at that point before those matured. I figured that by the time the company IPO'd the growth of the company would hit ~$10 a share, but I guess the company valuation after the series C/D never increased in value, hence the estimated 10x reverse split to get $15 price. My friends that stayed were working miserable hours/conditions and getting constantly abused by management, all in the hopes for a massive payout after 3-4 years, and in the end, all they got was maybe 80k pre-tax?. I really dodged a bullet, and I got to give my thanks to Motronic and others in this forum because I think he cautioned me about salary versus options 4-5 years ago in the negotiation thread when I asked about it. I very rarely go to this forum but it's probably had more impact in my career/life the any other place here on SA. just_a_person fucked around with this message at 04:58 on Mar 23, 2024 |
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Mar 23, 2024 04:46
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