Understand how your early-stage employee or advisor stock options might convert into real cash.
Experiment with 3 key factors that affect how much your stock option grant at a startup might be worth upon exit (when the company is acquired or IPOs).
Not sure how to calculate your percent ownership?
We assume a number of variables in order to help you understand just how many factors affect your potential payout from your stock options.
In order for option holders to get paid when a company is sold, all investors need to first be paid. This happens only if the company is sold for more than the investors put in.
We’ve found that this is on average ~$112M based on research from the NVCA's 2022 Yearbook.
Usually, companies need to raise multiple rounds of funding before exiting. In general, we see companies exit after 4 rounds (Series D).
With each new round of funding and natural growth of the company, we assume the valuation will increase by 3x between each round of funding.
This is roughly based off data from AngelList Venture's research.
The time between different stages of funding can vary. As of 2022, the average time from finishing a seed round to finishing a Series A round is 12 months.
We combined research from WilmerHale and Crunchbase to figure out the average times in between rounds of funding.
We’ve found that this is on average ~$112M based on research from the NVCA's 2022 Yearbook.
A "low exit" is defined as an exit in which the startup makes enough money to pay back its investors in part or in full, but not enough to provide its employees and advisors a percentage of the exit gains.
We based our estimations of this on Pitchbook and NVCA's 2020 Venture Monitor.
Many startups never make an exit. That is, many startups fail or either don't IPO or don't get acquired. The following are the average percentages of startups at each stage that never make an exit based on this research:
Seed: 97%
A: 88.7%
B: 84.1%
C: 80.7%