Stock options as part of an offer

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1

Hi there,

I would have a question around an offer which I have currently on my table.
The offer is for a startup which during its series C financing round got 40Millions CHF.
There is a section on the offer for share options. These 0.2% of the capital raised during series C (I assume 40mil x 0.2% /100= 80k).

I have only worked for listed companies before so this is completely new for me.

Do you think getting 0.2% of the company is a fair offer? I would be employee number 25 and C-level -1 Director.

I would like to understand how the options behave going forward. The future of the company will go through some more financial rounds further diluting my share part.
I understood from Google that the price of the options would increase even if the part would represent a lower percentage of the company’s shares.

Could anyone please help me to understand the option situation properly?

2

40 millions is the last round of financing. You need to know what is the value of the company. How much % of share, did the investors got for 40 millions ? For exemple, if it’s 10%, the company is worth 400 millions and your 0.2% => 800k CHF

In a startup which is not listed especially if based in Switzerland, I wouldn’t take into account the shares offered.
First dilution is quite likely to happen and also the shares will really worth something if the company gets listed. Something like 1 startup a year get listed in Switzerland.

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3

I’d just keep it in mind as a lottery ticket. If the company is the next facebook, then 0.2% would be worth 2.3 billion. If diluted 100 times then only 24 million. If the company turns out to be petsdotcom, then they probably end up worth zero.

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4

There are only 3 options for you to make money with that stock

  • company gets listed - is this a company that operates only in the Swiss market then this likely means listing on the Swiss exchange… probably not a great outcome
  • ability to sell in a secondary market i.e. to other employees or investors… not likely soon if they just raised 40M
  • company gets bought by another company or PE company. Is the company attractive? in a niche that has high potential? is there a clear path of growth from x to y? they just secured 40M so someone is backing them strongly. this is probably the best outcome

whether 0.2% is good or bad only you can say but as others said, what is the company valuation for the investors that put in 40M? Presumably much more than 40M otherwise they bought the 100% of the company.

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