Startups · Strategy

How much did you earn as an employee from an exit?

Dinesh sharma Software Tester at code brew labs

November 30th, 2016

If you joined a startup before as an employee, how much did you earn out when it exited?
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Mike Robinson

November 30th, 2016

The answer to that is going to be all over the map because different employees have different packages, and mainly because some companies exit at MUCH higher valuation than others. Early key employees at Unicorns can end up with many millions. But most companies don't get that far.

For a successful $100M exit, if you were a key employee and had 1% or the company in options or shares, you would probably wind up with something like $700k pretax (after allowing for typical investor preferences and accounting for the strike price of your options).

If the company "exits" very early at $10M, that same 1% would net you $50K - $70K.

Here is a very simple rough rule of thumb: how many shares do you have, and how many shares are there in total? That tells you your % ownership. Multiply that by a hypothetical exit valuation, then multiply that by about 0.7 to allow for investor prefs etc. Bear in mind that your startup may need to raise money again before it becomes valuable. That means issuing more shares so your % ownership goes down, and the new shares will get additional liquidation prefs.

Dane Madsen Organizational and Operational Strategy Consultant

November 30th, 2016

Mike is right - this is way too variable. In my exits, I had employees that had been there years that received less than people that had been there much less.  I depends on so many factors you have not detailed.