Ask HN: Should a shareholding employee have access to the companies cap table?
6 コメント
In general, I think that telling relatively early employees in a startup their fully-diluted ownership percentage has become the norm.
I assume that this is the 0.75% worth of shares at the current valuation they promised you. You should confirm that this represents your share of the fully-diluted, as-converted shares of the company.
Here is more detail on what fully-diluted, as converted means: https://www.capshare.com/blog/how-many-shares-are-on-my-cap-....
If you confirm that this represents your share of fully-diluted, as-converted shares, then you can calculate the total number of shares on the cap table by simply dividing the number of shares you receive by 0.75%.
Regarding your other questions, every startup has a different approach to levels of transparency about equity.
Most companies do not grant full access to the cap table to employees beyond the founder group.
Many companies will give employees, especially key employees, a sense of their ownership percentage after future rounds.
Companies will typically provide less information to former employees who have left the company.
Exceptions to all of these generalities are somewhat common.
I wrote an article on this subject based on our experience with the 5,000+ companies and cap tables we manage on Capshare: https://www.capshare.com/blog/will-cap-table-transparency-he....
I assume that this is the 0.75% worth of shares at the current valuation they promised you. You should confirm that this represents your share of the fully-diluted, as-converted shares of the company.
Here is more detail on what fully-diluted, as converted means: https://www.capshare.com/blog/how-many-shares-are-on-my-cap-....
If you confirm that this represents your share of fully-diluted, as-converted shares, then you can calculate the total number of shares on the cap table by simply dividing the number of shares you receive by 0.75%.
Regarding your other questions, every startup has a different approach to levels of transparency about equity.
Most companies do not grant full access to the cap table to employees beyond the founder group.
Many companies will give employees, especially key employees, a sense of their ownership percentage after future rounds.
Companies will typically provide less information to former employees who have left the company.
Exceptions to all of these generalities are somewhat common.
I wrote an article on this subject based on our experience with the 5,000+ companies and cap tables we manage on Capshare: https://www.capshare.com/blog/will-cap-table-transparency-he....
Thanks for the in depth reply. Especially insightful to hear an opinion about about what level of transparency most companies offer - I struggled to find much written about it online.
FWIW, Capshare looks great - I wish my shares were being managed through it.
FWIW, Capshare looks great - I wish my shares were being managed through it.
Personally I hate that the "right" answer to this question is no.
In my experience working at seed stage, as an early employee having access to the cap table is a given.
At mid to late stage, it's the polar opposite. Funding rounds further complicate things because not all investors get the same terms / buy at the same valuation. With the information available to a normal employee, it becomes virtually impossible to value your own equity.
It's exceedingly frustrating to know you own x% of a company without knowing the total number of shares or the total valuation.
In my experience working at seed stage, as an early employee having access to the cap table is a given.
At mid to late stage, it's the polar opposite. Funding rounds further complicate things because not all investors get the same terms / buy at the same valuation. With the information available to a normal employee, it becomes virtually impossible to value your own equity.
It's exceedingly frustrating to know you own x% of a company without knowing the total number of shares or the total valuation.
Add to that - you may own 1% of a company and after $10M liquidation event - you get nothing.
OR: you may own 0.0001% of a company and after $10M liquidation event - you get $1M.
Something to consider: difference between common shares and preferred shares with liquidation preference conditions.
OR: you may own 0.0001% of a company and after $10M liquidation event - you get $1M.
Something to consider: difference between common shares and preferred shares with liquidation preference conditions.
"It's my understanding that the number of shares are a worthless number without knowing how many shares have been issued in total. Is this correct?"
Yes, this is correct.
"Is it reasonable to expect the company to give me access to the full cap table?"
No.
But, it IS reasonable for your contract to state what percentage of the fully-diluted capitalization of the company your stock options are granting you the right to purchase (at the time of the writing, or at a predetermined time in the future, like at the end of an round).
All that being said: All early employees are going to get diluted eventually (in most cases), and nobody has any way to predict how much dilution you're going to experience over time.
So, while it may make you feel better to know exactly what your options would be worth today, it's kind of irrelevant to what they'll be worth once you pass your vesting cliff.
The best protection, in that regard, is to only work with people you trust. If you're worried about being screwed-over by these people, and you haven't even started working there yet, that might be a bad sign.
Yes, this is correct.
"Is it reasonable to expect the company to give me access to the full cap table?"
No.
But, it IS reasonable for your contract to state what percentage of the fully-diluted capitalization of the company your stock options are granting you the right to purchase (at the time of the writing, or at a predetermined time in the future, like at the end of an round).
All that being said: All early employees are going to get diluted eventually (in most cases), and nobody has any way to predict how much dilution you're going to experience over time.
So, while it may make you feel better to know exactly what your options would be worth today, it's kind of irrelevant to what they'll be worth once you pass your vesting cliff.
The best protection, in that regard, is to only work with people you trust. If you're worried about being screwed-over by these people, and you haven't even started working there yet, that might be a bad sign.
"It's my understanding that the number of shares are a worthless number without knowing how many shares have been issued in total. Is this correct?"
It's more than correct :(
Even if you knew the # of shares that had been issued, you'd also need to know the rights attached to each class of shares (e.g. some classes may have specified liquidation preferences) and also the terms on all outstanding options/warrants.
It sounds like you've already decided to take the offer (even without calculating the value of your 0.75%). So your only problem now is to verify that the # of shares in your contract matches the % in your offer. MalcolmDiggs' suggestion (getting the company to include the % that this represents on a particular date, in the contract) should be enough. That way, there's no chance of misunderstanding, and there's recourse for you if it turns out they lied.
It's more than correct :(
Even if you knew the # of shares that had been issued, you'd also need to know the rights attached to each class of shares (e.g. some classes may have specified liquidation preferences) and also the terms on all outstanding options/warrants.
It sounds like you've already decided to take the offer (even without calculating the value of your 0.75%). So your only problem now is to verify that the # of shares in your contract matches the % in your offer. MalcolmDiggs' suggestion (getting the company to include the % that this represents on a particular date, in the contract) should be enough. That way, there's no chance of misunderstanding, and there's recourse for you if it turns out they lied.
Long time lurker. Recently jumped into the world of startups.
I recently accepted a job working as a developer for a startup in NY that just completed Series A funding. In my employment offer, they promised me 0.75% worth of shares at the companies current valuation.
I'm working through the paperwork now with the company lawyers and it only specifies the number of shares that are being issued to me. It's my understanding that the number of shares are a worthless number without knowing how many shares have been issued in total. Is this correct?
What's the standard practise for an employee to know how many shares have been issued in total? Is it reasonable to expect the company to give me access to the full cap table? What about for future rounds of funding? Even after I leave the company but vest shares?
Thanks for your help.