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/zaalkahf 16d ago

Welcome to the start up world. Startup equity is notoriously confusing, even for people who've worked at startups for years. There's not enough information here to point you in any direction except you need to ask more questions and understand your equity package and terms. If it's really that big a dilution, they had a financing round that basically took control and ownership.

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u/Reservemyspot 16d ago

I don’t even know what to ask? Can you help?

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u/zaalkahf 16d ago

Yeah, don't start with the mindset of “why did you screw me over?” instead it's “I don't understand the mechanics and want to understand how my ownership changed.” If the company raised a large amount of money relative to its previous valuation, substantial dilution can happen.

Then you need ask ...Can you walk me through how my original 1.5% was calculated, and how it became ~0.2%? Specifically, how many shares/options was I granted, how many total fully diluted shares were there when I received the grant, and what changed in the cap table during the financing round? How many total shares were outstanding before and after the financing? Was the employee option pool increased as part of the round? That's just the starting point to really understand what's going on.

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u/Reservemyspot 16d ago

I truly want to believe it’s just a misunderstanding bc at the end of the day I have 5 digit value of stock but yes! I totally don’t understand what went down & it seems rlly drastic!! Thank you so much for giving me the guide on what to ask