Re:How to Evaluate Startup Offers
by jandrewrogers on Saturday October 09, 2021 @03:08PM
(#28812367)
A 3x liquidation preference is anomalous. Pretty much every term sheet I see is an eminently reasonable non-participating 1x, which is a de facto standard term these days. If liquidation preferences are consistently higher across startups then it is a sign of an unhealthy investment market.
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Re:How to Evaluate Startup Offers
by throwawaysea on Saturday October 09, 2021 @04:26PM
(#28812969)
I think there are two problems here. The first is that what is “standard” is not very well known, so candidates considering startups are operating with little in terms of default assumptions and expectations. Is there any resource that describes what the default even is?
The second problem is that companies are never transparent about any of these things. If you ask, you get funny looks or continued evasiveness, and candidates are left with only part of the full picture anyways. From other comments here it seems that even if you run through a checklist of questions, the company’s structure could drastically change in a subsequent funding round of some such event. And if that’s the case, does knowing the current state of affairs matter at all?