How to value startup stock options when comparing job offers

1. The strike price of the options.
2. The vesting schedule.
3. The last round valuation (per share as well as in dollars, post-money)
4. The last round date and lead investors.
5. Details on the terms of the last round.

Are startup options worth it?

High Certainty Of Growth. Startups are usually loss making. But if there is a high certainty of growth with a proven business model that will allow the company to eventually make a profit, then it’s probably a good idea to buy your options. You should know better than most how well your company is doing.

Are startup stock options worthless?

The vast majority of stock option grants issued will be worthless or worth very little. I interviewed an engineer who was leaving FitBit, a massively successful startup tale. Its market cap peaked over a $10B valuation but quickly settled down prior to employee liquidity and now trades around $1.3B.

How much equity should a CEO get in a startup?

Q: How much equity should a CEO get in a startup? There’s no magical answer, but for venture-backed start-ups, for years VCs have aligned on around 6%-8% equity for a non-founder / outside CEO.

Can I sell my options startup?

You can only sell your private company shares if you exercise your stock options and purchase those shares first. Depending on the strike price, though, you may not have enough cash to exercise your options, especially if your company requires you to hold onto it for a certain period of time before selling.

Do you get stock options at a startup?

If you’ve ever been offered a job at a startup, you may have heard the hiring manager say something like “We can’t match a big company salary, but we’re going to give you X thousand stock options, so you have huge upside!”. Options in a startup company do a great job of aligning investor, manager, and employee incentives.

How to find ownership percentage of stock options?

To find your ownership percentage, divide your number of shares by the total shares outstanding. Here is a table showing the relative ownership percentage for an employee with 10,000 options in a few different scenarios.

How to determine target value of Startup stock option grants?

To determine the target value of the grant, there is a multiplier applied to the salary for every role/level in the company. Here are the multipliers that we use at Skillshare as of today: Exec team/C-level: 2.45 VP: 1.86 Director: 0.54 Specialist/key contributor IC: 0.43 Sr. Engineer: 0.40 Engineer: 0.26 Individual contributor/most staff: 0.23

How big is a company’s stock option pool?

The size of a startup’s option pool will vary, depending on its maturation. However, the pool’s size, as a percentage of a company’s Total Capitalization, is generally between 15% and 20% at a company’s maturity.