Have you ever worked for a startup that had a down-round?
Did you stick around or did you leave?
How did it turn out?
Any takeaways to share with the class?
Asking for a friend ;-)
I haven't been in this situation, but I think it would really depend on a few factors:
- Is my cash compensation adequate? A down-round can make stock grants worth almost zero unless there's a huge rebound.
- Are people around me still motivated? I wouldn't want to be surrounded by sad coworkers.
- Are the founders still motivated? Their dreams of riches are probably evaporating. And a company with unmotivated leadership is not gonna be around long.
> Is my cash compensation adequate? A down-round can make stock grants worth almost zero unless there's a huge rebound.
Most startups fail and options and equity become worthless regardless.
In my experience, the biggest changes will be in morale and company culture. There is a chance that the company gets hit by the "Dead Sea Effect", all the talent starts leaving because they can find better opportunities while the lower tier devs stick around.
Be transparent with your boss about how it's affecting you, while also being sensitive that a lot of people are in a similar boat. The journey to liquidity is long. There will be more grants in the future.
We had a small down one, eventually company actually did a massive equity re-do for everyone giving us an option for a different strike and longer exercise window. It took 18 months from the "crisis" though.
Eventually the board realizes that they need the employees motivated.
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[ 2.7 ms ] story [ 31.9 ms ] thread- Is my cash compensation adequate? A down-round can make stock grants worth almost zero unless there's a huge rebound.
- Are people around me still motivated? I wouldn't want to be surrounded by sad coworkers.
- Are the founders still motivated? Their dreams of riches are probably evaporating. And a company with unmotivated leadership is not gonna be around long.
Most startups fail and options and equity become worthless regardless.
In my experience, the biggest changes will be in morale and company culture. There is a chance that the company gets hit by the "Dead Sea Effect", all the talent starts leaving because they can find better opportunities while the lower tier devs stick around.
We had a small down one, eventually company actually did a massive equity re-do for everyone giving us an option for a different strike and longer exercise window. It took 18 months from the "crisis" though.
Eventually the board realizes that they need the employees motivated.