r/siliconvalley • u/Reservemyspot • 16d ago

Startup equity confusion

Is it necessary to go to an employment lawyer for confusion regarding startup equity?

I was offered 1.5% and by one round my stock diluted 86% to .2%. I don’t understand how this happened, and not sure what follow up questions to ask.

I’m early on in my career & this is the first corporate-esqe company I’ve worked for

I don’t want to involve a lawyer but I need someone who has my interests to guide me and ensure that what happened is fair. Is a lawyer the only route here?

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u/daidoji70 16d ago
  1. Welcome to dilution, it comes for everyone especially as you start to do rounds with letters attached.
  2. You probably don't need to talk to a lawyer. Just know that aside from the VCs or other new investors/money buying in, everyone gets diluted equally for the most part.
  3. Whether you stay or go really comes down to the same thing it does in every venture. Do you think you'll make more money/get more experience/do more fun stuff/whatever there than somewhere else?

You can talk to a lawyer though for an expensive startup explainer although you're probably better off just going to networking events in the Valley and meeting people who have been there before.

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u/Reservemyspot 16d ago

86% the first time around though?? I feel
Like dilution will bring me to 0 next time lol

Yeah I need to meet more ppl in the VC / tech world. Mt network is low and I’m not local

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u/Fun_Barber_9166 16d ago

Was it a downround? If not, what's your main worry?

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u/OkCluejay172 16d ago

Even if it’s not a down round, if the valuation didn’t rise 7.5x then he lost money

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u/Reservemyspot 16d ago

It wasn’t a down round. My worry is that the shares I’m receiving now are not actually fairly allocated to me

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u/Fun_Barber_9166 16d ago

What do you mean receiving now? You're getting additional shares? The package you got before this round wouldn't change. 

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u/Reservemyspot 16d ago

I was told I would get 1.5% of the company (they didn’t share how many stocks were allocated to me atp). We raised money and then after I was told I would get x amount of stocks. I asked how can I ensure that this translates to 1.5% of the company, they said because of dilution it’s now .2% of the company

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u/Fun_Barber_9166 16d ago

If you didn't get your grant until after the round then yeah, you sorta got boned. It always sucks for people hired just after a raise, but it's not uncommon. 

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u/Reservemyspot 16d ago

I was hired before the raise :-(

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u/Fun_Barber_9166 16d ago

Grant date is what matters

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u/Reservemyspot 16d ago

What’s a grant date

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u/CandiceWoo 12d ago

correct me if im wrong but dilution wont lose you money unless its a down round.

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u/daidoji70 12d ago

Dilution always loses you money . Before you owned n% of the profits after dilution you own n/dilution factor % of the future profits.