can you explain a bit about how preferred shares wipe out employee options? thats only in the scenario the company exits for far fewer than its current valuation?
1. Usually debts are paid off first, then preferred shareholders get their money back, before regular shareholders get a chance to sell. I got a 1099 for $0.00 one year thanks to this!
2. When new shares are issued, usually preferred shareholders get shares for free to maintain their percentage in the company. Other existing shareholders do not, of course.
svachalek|9 years ago
2. When new shares are issued, usually preferred shareholders get shares for free to maintain their percentage in the company. Other existing shareholders do not, of course.
jzl|9 years ago
Also, define "current". What matters the most is its valuation at exit relative to its valuation in the final few funding rounds.