Showing posts from December, 2013


Alex McCaw wrote an excellent blog explaining stock options -  Everyone getting options (an engineer or not) should read this - especially the tax implications of converting your options.

I thought there were several common issues that could use some further explanation using an example.

For our example, lets say a VC investment made of $10 M at a valuation of $50M.

Pre Money and Post Money Valuation.  Since people like big numbers, so this is usually expressed as post-money. So the company was valued at $40M before the investment, but now that they have another $10M in the bank, they are now worth $50M.

Dilution.  Before the investment there were 4,000 shares/options, each worth $10, and each representing 1/4,000th of the company.  For the investment another 1,000 shares were created and sold to the investors at $10 each.  Each share/option each employee had was worth $10 before and $10 after - so there was no economic di…