How many shares is reasonable for an offer from a startup?

[fs5]

I received an offer with 35k shares. Not knowing the number of outstanding shares from at the company they said it was more than 0.1% of the company.

They just received series B funding, 30 employees, 1.5 years old. I'll be a mid-senior level engineer.

 

[Deleted member 4644]

If you think that it will grow big, then 35k shares will be a lot. If you think it won't get huge, then 35k shares might be worth almost nothing. Do you know what the company's yearly income is? You should get a dividend from those shares I would think......

 

[Descartes]

Will they show you the financials? It could be a great deal or it could be next to worthless. Never know what the future holds obviously.

 

[JS80]

Can't say shvt without financials. I guess you can ask what they valued the company at when they got series B funding.

 

[Safeway]

You could make a pretty penny if the stocks went anywhere. $10.00 would be pretty good :beer:😀

 

[fs5]

Originally posted by: Descartes
Will they show you the financials? It could be a great deal or it could be next to worthless. Never know what the future holds obviously.

The company will make it big or be bought out. The public figures they show shows a huge upward trend. I don't think they'll show me the pure financial numbers but I'm assuming the CEO holds more than 40% of the company while each VC holds 20% or more.

That leaves 20% at most for the employees. I'm not coming in as a VP, director, or manager... 0.1% of the company is decent I suppose.

 

[JS80]

Originally posted by: fs5

Originally posted by: Descartes
Will they show you the financials? It could be a great deal or it could be next to worthless. Never know what the future holds obviously.

The company will make it big or be bought out. The public figures they show shows a huge upward trend. I don't think they'll show me the pure financial numbers but I'm assuming the CEO holds more than 40% of the company while each VC holds 20% or more.

That leaves 20% at most for the employees. I'm not coming in as a VP, director, or manager... 0.1% of the company is decent I suppose.

i would bet non-senior management employees hold less than 5%.

 

[DotheDamnTHing]

Need financial info

 

[VTHodge]

The number of shares you own is completely irrelevent without knowing what is behind them. Stocks split all the time. Would you rather own 35k shares of a stock worth $2/share or 70k shares of a stock worth $1/share. It's the same thing. If your OP said that you would get 70k shares, would that change the answers you got here?

 

[fs5]

Originally posted by: VTHodge
The number of shares you own is completely irrelevent without knowing what is behind them. Stocks split all the time. Would you rather own 35k shares of a stock worth $2/share or 70k shares of a stock worth $1/share. It's the same thing. If your OP said that you would get 70k shares, would that change the answers you got here?

well it's 0.1% of the company... I think that's much more relevant. This is assuming they don't split the stock again.

 

[Ameesh]

Are they RSUs or options?

 

[imported_KuJaX]

You thin k .1% of a company is good when there is only 30 employees?

Lets put it this way, you aren't going to get rich from this.

 

[Fern]

Originally posted by: fs5
I received an offer with 35k shares. Not knowing the number of outstanding shares from at the company they said it was more than 0.1% of the company.

They just received series B funding, 30 employees, 1.5 years old. I'll be a mid-senior level engineer.

As others have said, not enough info.

But look at it this way - for your stock to worth at least $100K, the company has to be worth $100 million ($100M x .001 = $100k).

People cautioning aginst "stock splits" are using the wrong term. The correct term is "dilution". Dilution would occur if additional shares are authorized/issued so that your .1% became an even smaller %.

I recommend that you make sure your cash compensation is fair, then the stock is just icing on the cake.

Be aware that the reciept of stock (in return for services) is a taxable event. I.e., you may have to pay income tax on it.

Does this company have a (tax) CPA as CFO? , or at least a good accounting firm?

I hope so, many companies screw this stuff up. There are ways to at least defer the taxation of stock awards/options ("Substanial Risk of Forfieture" etc under section 61 of the Internal Revenue Code etc).

Fern

 

[VTHodge]

Originally posted by: Fern
[People cautioning aginst "stock splits" are using the wrong term.

The message title says "How many shares is reasonable for an offer from a startup. My purpose in bringing up splits is that the number of shares is completely arbitrary. I used the word that I meant to use.

 

[Fern]

Originally posted by: VTHodge

Originally posted by: Fern
[People cautioning aginst "stock splits" are using the wrong term.

The message title says "How many shares is reasonable for an offer from a startup. My purpose in bringing up splits is that the number of shares is completely arbitrary. I used the word that I meant to use.

Point well taken.

I read your post and agree with it.
----------------------------------------------

But I'll use this opportunity to emphasize dilution. This company has floated a Series B (in the traditional sense this should mean a second round of preferred stock was authorized & issued). Should they go for a Series C, the OP would suffer dilution and hold even less than .01%

Dilution is not always, or should not be, the "bad thing" many people think. Dilution done properly should bring in sufficient additional capital for corporate purposes that end enhancing everyones stock position (less %, but worth far more in actual cash).

Unfortunely, most pre-IPO companies suffer dilution because of budgeting problems, expected goals have not been met with funds raised to-date, the result being less % ownership and stock actually worth less.

Hope it works out for you OP,

Fern

Fern

 

[FoBoT]

Originally posted by: fs5
I received an offer with 35k shares. Not knowing the number of outstanding shares from at the company they said it was more than 0.1% of the company.

if they did an IPO at $100 million, then .1% would be $100,000 ? sounds like a pile of $$$ to me