Dear Unicorn, Exit Please

Post by mahyarm » Fri, Jul 24, 2015, 9:28 PM UTC

birken wrote: post #118

mahyarm wrote: post #106

Earlier quoted context omitted.

It's often only %10 of vested equity, once every one or 2 years. Also remember that if your $5mm company becomes a $1b unicorn after 4 years, and you got %0.5 at the start, then through dilution your %0.5 stake can become a %0.05 stake. Which means you get $500k / 4 years = $125k/yr in stock. But you cannot sell that stock, so it would of been better to go work at apple. It's very rare that a startup will pay better…

Your dilution math is pretty pessimistic. Even if you are diluted by 30% 5 times (which would be extremely uncommon for a company that grows so successfully), you'd go from 0.5% to 0.1% of the company in your example. More realistically, you'd probably expect to have around ~%0.15. So now you'd be looking at 1 or 1.5MM in a probably still-growing company, which compares much more favorably. Yes, as I noted above I do…

Post by limeyx » Mon, Jul 27, 2015, 4:05 PM UTC

jalonso510 wrote: post #84

scurvy wrote: post #18

Allowing employees to make 83B elections on their options immediately after starting would help this situation a lot. Most companies don't "allow" you to do this. I've heard conflicting things on the subject. Some say the company has no say in the matter and it's purely in the IRS' court (exercise and notify IRS). Others say the company must allow you to do it. Second, the bogeyman of "letting some strange interloper…

It's not a matter of a company choosing to allow an 83(b) election. It's a personal tax election that you make by mailing a filing in to the IRS and you can do it without the company's involvement or permision. The problem is that 83(b) elections just aren't applicable unless (i) you own stock, not options, and (ii) that stock is subject to vesting. Longer explanation: When you buy something, if you are paying less t…