Ask HN: In a job offer, can you ask for equity at a previous valuation?

4 points by vishalzone2002 11y ago ↗ HN

Hi HNers, I have a question regarding startup equity. If I am offered a job from a startup that recently raised a huge round, can I negotiate for equity at a previous valuation? Or that is just same as asking for more equity?

thanks!

3 comments

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mailslot 11y ago ↗

You can ask for anything and you should, if you are worth it.

hmahncke 11y ago ↗

Generally, you can only be offered equity (I assume you mean options on common stock) at a current valuation of the common stock. If the company just raised a round, they will have a new valuation of the common stock (a 409a) valuation.

If the company offered you options at a different (lower) valuation, they would have to book the difference as a compensation expense to you. While it's technically possible, they are unlikely to want to do that.

Option backdating (getting equity at a previous valuation) is discussed helpfully here: https://en.wikipedia.org/wiki/Options_backdating

fsk 11y ago ↗

Due to accounting/tax rules, "qualified incentive" options are required to be priced at "fair value".

It's better for you to just ask for more equity.

However, realize that equity is usually worthless. If they already raised a lot of money, you're probably only going to get a tiny slice. If the equity is a factor in your decision to accept the job or not, you probably shouldn't.

Remember that the recent investors probably got a liquidation preference, which means they need to eventually sell for a LOT MORE than the price of their last round, or common shareholders may get nothing.