Urgent Questions on Equity Shares from a Series-C Tech Startup offer

[moneytaichi]

I just got a job offer from a series C tech startup today. It's based in Bay area. They sent me a preliminary offering email with 2,000 equity shares, but they don't specify the vested period and value of shares - is the equity share price even known for series C startup?

I'd appreciate your quick inputs. They are waiting for my acceptance confirmation. I need to respond by 2/22, Wed.

Thank you so much!

P.s. they have not provided me the official offer letter so maybe I should ask them give the official letter first.

[seattlecyclone]

Yes the investors in Series A, B, and C agreed on a certain price for those shares at the time the funding round was closed. There is also what's called a 409(a) valuation that the company needs to do periodically to revalue their shares for tax purposes, and new option grants are typically offered at the price set by the last 409(a) valuation. The company should be willing to share this number with you, as well as what percentage of the company those 2,000 shares represent on a "fully diluted" basis (i.e. after any existing options are exercised). If they are not willing to share these numbers I would consider that a red flag. They should also be willing to share the vesting period with you. A common schedule for these startups is to have a four-year vesting period, with one-quarter of your shares vesting on your one-year anniversary, and the rest vesting in equal amounts monthly for the next three years after that.

[moneytaichi]

Thanks so much @seattlecyclone! It was very helpful. I don't have experience on this area. From what I read online, stock options can go all over the place. It's better to go in with open eyes than wishful thinking :)

[seattlecyclone]

The stock options are essentially lottery tickets. More likely than not that they end up worthless, but if the company has a big exit down the line you could get a nice boost toward FIRE.

[314159]

seattlecyclone gave a good summary. When I was negotiating for my current job I used this checklist as a resource on what to ask to evaluate options, I would take a look through there. Your (potential) employer should be able to answer all of these questions.