Figma stock11/11/2023 This is similar to the # of shares you might buy of a public stock, except that you won’t be able to freely buy and sell these shares whenever you want to. This 20,000 is the number of shares from the company you’ll eventually be allowed to buy. Let’s take a look at what each of these terms means.Ģ0,000 shares: Your offer letter might say something like “Subject to the approval of the Board, you will be granted an option to purchase 20,000 shares”. To make calculations easier for the rest of the post, I’m going to use the following semi-realistic numbers: ![]() Do not use this post as a tax calculator! Use this post a tool to ask better questions to well informed people about potential outcomes.Ī standard deal for an early startup in the valley looks something like this: I’m an early software engineer at Figma (company was ~20 people when I joined). Since tax implications are important here, and taxes are specific to your locale, this post is also specifically references American taxes.ĭISCLAIMER: I have zero professional experience in tax or law. Companies usually move from ISOs → RSUs → publicly tradable stock as the company grows. We’ll assume that the equity part of the offer is for incentive stock options (ISOs), rather than restricted stock units (RSUs), or actual stock if it’s a public company. This post is going to focus on a narrow but common set of circumstances for employees at early startups ( usually <$1B valuation). I’d like to pass that knowledge on to you. He proceeded to explain what an 83(b) election is, and he was right - it did and will save me a ton of money. He told us he was going to tell us something that could potentially save us a ton of money if we ever joined a startup. At the post-conference happy hour, an Engineering Manager at Twitter named Ian Chan took a bunch of us aside. If you’re unaware of some of these policies, you might end up paying $100,000+ more in taxes than you anticipated, or be forced to choose between staying at a job you don’t love and leaving potential millions on the table.īack in 2012, I was at a conference called CUSEC. Subtle differences here can have massive downstream consequences. You’re bombarded by terms like ISOs and NSOs and vesting period and cliff and strike price and fair market value that you don’t really understand, but owning 0.1% of the company sounds great in theory, so you go to sign on the dotted line. The offers have a bunch of numbers and you’re not sure how to put them all together. You’re done your interviews, and you have a few Silicon Valley startup offers in-hand. ![]() A potential employee’s guide to Silicon Valley startup equity
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