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Is MSCI product or service based company?
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Hello! Anyone work at GE Healthcare?
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To be conservative you should value that Equity at a fat $0
@P1, I have to google all that shit
Op - go for it ...would be a good schooling for you while also making money and a chance to grow with them and get equity . You can always go back to consulting
How would you decide that it is a "10 percent increase including equity"
1. Find out how much funding
2. Find out gross burn versus cash in bank
3. While at this level the equity is not likely to really pay out big, find out the percentage of company and the current preference stack.
4. Understand if the CEO has ever done one this early.
5 make sure you love the team
That round was based on preferred shares, you are being granted common options most likely if they have a real vc investment.
1. The difference in value in these two is a factor of 10 as a rule of thumb. If they have a 409a valuation of the common that would be a good reference.
2. To keep those options once they vest and if you leave you will have to pay the exercise price and taxes on the difference between the grant price and the 409a price when you exercise
If the 409 is very low and the strike price is same as 409, there are massive tax advantages of buying them up front. If it is 1202 qualified startup (likely is) and you hold for 5 years before you get liquid and you are in a high income tax state the difference in taxes could be 40 points.
And P1 showing why they are a Partner. Dropping knowledge! 😎💁
EY1. That is an incorrect statistic, especially for a firm who has already gotten financing from a known VC. Now if the common options pay off is a different issue.
Much like I said if the CEO does not disclose burn in a 10 person company, as a CEO of a startup is an employee asks for perks or cash instead of stock (and not a highly leveraged commissioned sales rep), I would ask them to run away back to consulting.
Some more company details: marketing analytics focus leveraging machine learning, prestigious VC firm investor (not sure how much funding), 3 years old, very impressive team, great early traction with a few major clients and revenues +$1M last year
Equity valuation is based on the last round, and they have seen significant growth in revenue since that valuation. Nothing is guaranteed, but it seems promising to be worth some real cash. I do recognize, however, that I could get diluted in future rounds or the company could go belly up.
P1 is it traditional for a company to provide burn rate and cash position to non-employees? I'd love to know that, but don't want to push the envelope too much. One co-founder has built and sold a business before, but I don't think it was a major success. The second co-founder is an absolute stud (multiple exits, well connected/respected). There are aggressive hiring goals, but I will not have direct reports for a while. Being able to build the team is dependent on business growth.
Also- can you elaborate on the current preference stack? Are you talking about the cap table and liquidation preferences?
ACN OP.
1 yes liquidation stack and be careful if a convertible note, those can blow up if the next round comes in at a low price.
2 if a CEO of a ten person company will not provide you gross burn and runway, run away.
Ask for more salary and no equity. 99% of startups don't IPO or get bought out
Equity is an illusion. It means something if the startup goes somewhere. It's like earning commission for doing great. If the startup sucks, then down goes the equity.
Equity != commission.
One is based on your personal performance against a period based goal, the other is about the shareholder value your team has built as a whole.
More importantly if a true startup, and the equity is held 5 years from early exercise the first $10MM is taxed at 0 percent federal cap gains vs 39.6 percent. 1202 tax gain treatment.
It is risky but calling it an illusion would be hyperbole.
P1 -not sure what you sayings , but I sounds fancy ...
^it sounds
When this redneck hears his words are fancy, he not quite sure how to react; except to say Roll Tide.
^there it is, partner just lost my vote 😜 #goblue
TA1. 41 to 14. Let me remind you, 2012, Dallas, 100 degrees outside. But nice and cool in the stadium while AJ McCarron and TJ Yeldon dominated the Blue.