The 10 Essential Questions to Ask Before Accepting an Offer from a Private Tech Company
What you should know before accepting a Startup Offer
👋 Hey, Emile here! Welcome to the 8 new subscribers since the last post!
✨FiCombinator✨ is the fun, weekly newsletter that helps employees, founders, and investors navigate the financial side of tech. Simply put, it’s the information I wish I had when I started in tech over a decade ago.
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“Yelp will recommend that the Board of Directors grant you an option to purchase a specified number of shares of Yelp's common stock with an exercise price equal to the fair market value on the date of the grant.”
In 2008, this was my introduction to Silicon Valley stock options, and to be honest, I had no clue what those words meant. At the time, I was 22, a fresh college graduate, and Yelp was valued at less than $200m. Today, Yelp is worth several billion.
With the turnover in tech right now, whether you are joining your first company or changing jobs, many of you will find yourself in a similar position. To help you evaluate your opportunities, the next several weeks will be a deep dive into equity compensation. That way, you will understand what you are being offered, what levers you can pull, and how to set yourself up for the best financial outcome. If you don’t pay attention, you could end up with little, while your coworker ends up with millions. It has happened many times before and will happen in the future.
To kick things off, let’s start with the questions you should be asking or at least know the answers to. Each question will become a whole post in itself. So this is meant as a guide. Each week we’ll dig into each point and why it’s there.
The 10 Essential Questions to Ask Before Accepting an Offer from a Private Tech Company
🏢 The Company
What is the total number of outstanding shares?
How much has the company raised, and when was the last financing round?
📄 Your Offer
What is the structure of your equity? Restricted Stock, ISO, NQSO, or RSUs
How many shares are you getting, and what is the strike price?
What is the vesting schedule and cliff?
How long is the Post Termination Exercise (PTE) window?
💸 Early Exercise
Can you exercise early?
Can you get a bonus to help offset the cost of exercising early?
🦺 Accelerated Vesting
Is there accelerated vesting?
What are the triggers?
📚 Further reading:
An Introduction to Stock and Options for the Tech Entrepreneur or Startup Employee - by David Weekly
The Holloway Guide to Equity Compensation - here is the original Github post that spurred the e-book
What I Wish I'd Known About Equity Before Joining A Unicorn - by Anonymous
Things you should know about stock options before negotiating an offer - by Julia Evans
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Sincerely,
👋 Emile