[notbitter]

Usually: millions to the investors and founders for their stock. Employee stock will be worth little due to investor preferences. The acquirer will pay hundreds of thousands to retain a few "key employees", and tens of thousands to the ordinary developers (similar to what they'd get as a hiring bonus). This is why it doesn't make sense to be a startup employee.

Your question about why developers can't capture more of their value is a good one. Obviously acquirers would prefer not to pay $1M signing bonuses if they can avoid it, but they also seem to be happier about paying off VCs than engineers.

[Drbble]

You seem to be assuming a gargantuan preference in this case. I thought just 1x to 2x was the max these days.

[beagle3]

Let's look at the numbers:

Let's say investor puts $1M with x2 liquidation preferences into company valued $3M pre-money (25% equity post money). Company then gets acquired for $20M. Investor gets $2M+$4.5M=$6.5M, rest get $13.5 (of which a much larger part usually goes to founders, and a small part to employees - e.g. $12M to 2 founders, $1.5M to 15 employees)

If they put $5M with x2 into company valued $5M pre-money, and company gets aquired for $20M, investor gets $15M, rest get $5M. Employees will often get a nice signing bonus from it, but the only one who can have a potentially life changing event is the founder.

[heretohelp]

He's right about it being historically the case that being a startup employee is a bad gig.

I honestly think the value proposition for startup employees has to come down to risk appetite, the quality of the team you're working with, and getting to work on interesting problems.

Any kind of pure economic calculus that properly accounts for risk is going to favor established companies if you're good at the career game.