My company sold for $100M and I got zilch – how can that be? (medium.com)

Article summary

The article discusses a scenario where a company sells for $100M, but an employee receives no payout, highlighting the complexities of startup equity and funding structures. The employee's situation is attributed to the company's funding structure and liquidation preferences. The discussion revolves around the importance of understanding equity compensation and the potential pitfalls of startup funding. Employees are advised to be aware of the terms and conditions of their equity grants to avoid similar situations.

Main themes

• startup equity
• funding structures
• liquidation preferences
• employee compensation
• venture capital

What commenters say

• Employees should thoroughly understand their equity compensation and funding structures to avoid being left with no payout in the event of a company sale.
• Founders and investors may prioritize their own interests over those of employees, leading to unfair outcomes.
• Liquidation preferences can have a significant impact on the payout employees receive, and high preferences can be detrimental to employees.
• Employees should not assume their equity is worthless, but rather understand the risks and potential outcomes.
• The mindset of assuming equity is worthless can be useful for personal financial planning, but not for evaluating equity grants.
• Startups should prioritize transparency and fairness in their equity compensation and funding structures to attract and retain top talent.
• High liquidation preferences can be a sign of a weak founder or a high-risk investment, and may not be in the best interest of employees or the company as a whole.