Scott Belsky has a great post up titled Don’t Get Trampled: The Puzzle For “Unicorn” Employees. In it, he’s got a bunch of questions, along with detailed discussion, that you should ask your potential employer if you are considering a job at a unicorn (company with > $1b private valuation.) His suggestion is to strongly “audit your comp” in advance.
The questions include:
- Have you raised capital with liquidation preferences, and what are they?
- How many months of runway do you have?
- If you need to raise more money but are unable to do so at standard terms, will you accept less favorable terms or will you raise at a lower valuation?
- Has the company taken on debt?
- Does the company aspire to be a public company?
- If the company’s plan is to stay private for the foreseeable future, have there been secondary sales for employees and/or founders?
- Have the company’s financials been audited?
I encourage you to read the whole post at Don’t Get Trampled: The Puzzle For “Unicorn” Employees.
Today’s VC post of the day is from Albert Wenger (USV) and titled Presenting Option Grants to Boards. This is feedback I give to CEOs 98% of the time after my first board meeting. While there is no standard for how to present option grants, Albert lays out a very clear set of eight pieces of data he likes to see. The first four are the the columns in the spreadsheet and each employee / option grant are the rows. The next two are footnotes for options grants that aren’t standard. And the last two are contextual data that should always be included since board members are on multiple boards and won’t remember this from company to company.
Here’s are the eight pieces of data – go read the post for more details on why all eight are necessary.
- Employee name
- Title/role at company
- Absolute size of grant in number of underlying shares
- Percentage size of grant fully diluted
Footnotes data (for option grants that aren’t standard)
- Special vesting considerations that differ from the plan
- For refresh grants: how many options does the employee already have and how far are those vested?
- Total size of option pool and remaining available pool (absolute numbers and percentages fully diluted)
- Grant size bands by role (if you have established those already) — if not, include existing employees in similar roles for comparison (including their start dates)