[balls2you]

as someone who has worked in startups for the last 10 years as always an early employee and disillusioned by it... the VCs think of you as replaceable unlike themselves... more money buys more power... you as an employee have only a single power - "quitting".

[kylelibra]

I get that incentives are misaligned between involved parties (VC's, founders, employees), but it seems very disingenuous to knowingly withhold this information.

[loumf]

Is it being withheld? Have you asked?

Liquidation preferences are mostly there for the low exits -- the VC is trying to stop the founders from making ONE MILLION DOLLARS!!! by just selling it out right away for a low (but still very high for a pair of people) amount of money. I haven't found that this is a secret.

As an employee, you should assume that you aren't going to see much if the exit is low (no matter what the founders/VCs tell you).

I would also say that this is basically true for Angels if the company goes through a few more rounds and then fails to reach real exit velocity.

[q2]

>>> Is it being withheld? Have you asked?

Does it needs to be asked? Isn't it transparency in operations and responsibility to people who believed and invested before in terms of effort or money? It is unbelievable, if they are hidden/undisclosed to remaining stakeholders.

[loumf]

Your disclosure rights are in the contract. If you don't like it, don't sign.

[droopyEyelids]

Hey! That is sort of the beginning of class-consciousness.

[angersock]

So, two questions for you (and anyone that cares to answer):

1. Has a founder ever said "Don't worry, we'll take care of you?"

2. Has that founder ever delivered during the exit?

[loumf]

1. No, and I wouldn't believe them if they did.

2. Nonetheless, they have always delivered more than what was contractually obligated (in the form as a retention bonus at the new company or some other commitment).

[balls2you]

In my case, both the startups were "sold" off to another larger holding. I personally, did not get anything worthwhile in a serious dollar amount so I chose not to exercise my options. Really, after the dilution your employee stock options are miniscule. And savvy startup CFOs will give employees small quantities of options not large.

EDIT: Yes, and these were not traditional Silicon Valley startups, they were NYC/Finance area startups. The original founders were not developers (your "bros"), they were finance guys!

[tptacek]

Yes.

[dd36]

Did your equity comp get valued at these inflated numbers or at some lesser value given the lack of protection?

I am wondering if employees get screwed by the tax man due to these inflated valuations.

[loumf]

Can't speak for all companies, but at the three I know about, the employee valuation is the audit (much lower) one. The stock an employee gets is a different class and it's not unusual for different classes to have different prices (they are actually different -- have different payouts)

[kzhahou]

Wanna share your equity %, the company exit size, and your final $ haul from stock?

[balls2you]

no equity %. The savvy CFOs will not tell you what your percentage equity actually is. this allows the CEO/top brass to dilute the pool by issuing millions of options before the sale of the company to a buyer. Since I didnt work for a startup that went IPO, $ haul was 0. i didn't exercise the options, they felt useless compared to the effort I put in.

EDIT: also as a traditional employee (in my case developer), you will not be aware that your company is being readied for sale to another before it actually happens. Only, if you're a very tiny company like 10 folks maybe you can know. Otherwise a startup that grows from 10 to 100 or more, then forget it.

To clarify I was an early employee after a funding round and not before. Those who are employees before any funding round are basically "founders" and can get some sort of decent payout.

[kzhahou]

You should have known (should have asked, they should have told you) the percent. That should not be secret, at any size company. Too bad.

[balls2you]

You don't think we did ? That's just silly to even think that employees who are more emotionally vested in a startup will forget to ask what their equity is. They don't tell you. That's the norm. Consider yourself lucky if you are told what your equity is worth. And it will be diluted to nothing regardless.

[LunaSea]

Why would you even join or stay at a startup who's not prepared to give you the real % figure ?