You should absolutely ask about A) and be very suspicious if they refuse to tell you. No one can answer B) with any real confidence because they don’t have a crystal ball. C) is almost always going to be at IPO or when the company sells, though maybe if you’re extremely important they’ll let you negotiate to sell some at a later round, though given this complicates things in most cases they’ll likely not want to bother with it unless you have a ton of leverage. D) is almost always going to be one year cliff, then rest monthly over four years. That should also be extremely easy information to get.
Regarding C, usually you need to wait a bit post IPO until the investors had opportunity to sell their stock. Only THEN it's your turn. It's called lock-up period and lasts usually 180 days (half a year). Just keep that in mind.
Also during sale, investors might choose to execute their liquidation preferences, which means that your shares might become worthless. Employees who paid hundreds of thousands of USD annually in opportunity cost have no such clauses to get their money back.
Huh, TIL. Investopedia only says "may also include early investors" [0]. I've checked the S-1's of some companies.
Cloudflare's S-1 has a 180 day lockup for "Our executive officers, directors, and the holders of substantially all of our capital stock"
In One Medical's S-1 "We, our directors, executive officers and the holders of substantially all of our equity securities, have agreed" to 180 day lockup.
In the Unity S-1 they have "certain holders of our common stock": "All of our directors and executive officers and certain holders of our common stock and securities exercisable for or convertible into our common stock, are subject to lock-up agreements that restrict their ability to transfer such securities for a period of 180 days after the date of this prospectus", and apparently they allow selling of 30% of the stock within the first two days of trading. Couldn't find any reference on who those certain holders are.
I suspect it may be the IPO underwriters, the big financial institutions that most companies going public will work with to make their shares available to the public. In short, the company and these institutions negotiate the initial price of the shares beforehand, and on the day of the IPO, those institutions purchase those shares from the company at that price (thus funding the company) and then immediately flip them (hopefully for a profit) to the masses.
What is a reasonable range for an answer to (A)? I know it's going to depend on what stage the company is at, and I figure 1% is probably going to be the upper bound, but I don't know what the lower bound should be.
A is one area for which there seems to be some very rough standards, if you visit Angel List you might see job offers with % equity listed, and it's usually in % terms not number of options.
1% would be quite a lot for an employee. Once the team is past the founders plus a few more, the only people getting more than 1% would be key executives.
Probably because if you’re joining an early stage company you’re inevitably going to get diluted if there are any later rounds. By how much will depend on how the company is performing so they won’t be able to know exactly what this will look like ahead of time. Perhaps putting the percentage in writing opens up some liability down the line as a result.
You should be able to get the number of outstanding shares at the time you join in writing though and then the percentage is trivial to calculate (though as other commenters pointed out you might not be able to get information on any existing liquidation presences investors might have that make it hard to really know what you would get if the company were to sell for x amount...
B) is trivial to answer: Either the shares are going to dilute and the company may fuck you over making them worthless, or they are not going to dilute.
