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by startupfounder
3807 days ago
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This is correct. Most employees have a stock strike price that is say $2.00 when the company is valued at $20.00. So if each Foursquare stock was worth $20 and is now worth $10, the strike price of $2 still allows employees to make $8 per share now. If you are granted 100,000 shares and wait it out and build the company back up to $20 you will make $18 per share times 100,000 shares for a nice little $1.8M bonus for putting in the hard work. Maybe because you stuck it out you not only increased the price to $50 per share, but you were also granted 100,00 more stock because you didn't care what TechCrunch said. $9.6M isn't bad for 4 years of hard work... |
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"Now" is wildly inaccurate; these are still illiquid assets, so even if this person were to exercise their options, they can't sell yet, most likely (I'd be shocked if they could turn much of a profit selling in the private markets).
And I have no idea what the terms of the new investment are, but I imagine they include some sort of protections for these new investors (I'd put money on them getting their money back plus full participation in a liquidity event). They probably get preferred shares. They probably get last-in/first-out privileges.
If you joined in the last two years, you're probably underwater based on strike price. Even if you're not, if the company has a liquidity event, once these latest investors get their money back, you're probably underwater by then (this new $45m coming off the top, minus any debt, you might split whatever's left -- MAYBE).
If you're an employee, you're probably not going to get anywhere close to $9.6m even if the stock rebounds. That's reserved for the new CEO who turns the company around, maybe some of his top brass.