Are your ESOPs worth it?
My profile: EX. Founder turned Product+ strategy person YOE: 5+ ESOPs: 80 lakhs Cliff: 1 year Vesting period: 48 months
I am still thinking after how many years it will be valuable given the liquidity is very rare for ESOPs. Any thoughts?
Talking product sense with Ridhi
9 min AI interview5 questions
ESOP value has following risks
- Company growing sizeably and being valuable
- Founders ensuring liquidity events for everyone.
You should be joining early stage startups for the experience and your growth. ESOPs should be taken with above two probabilities
My concern is that in the last 7-8 years I have rarely heard about liquidity. ESOPs are always the last ones to get liquidity after VC, angel, founders....
VC/Angels have a different class of shares altogether. You shouldn’t be comparing to them at all. They will get some money in average situations while ESOPs are only worthwhile if it keeps doing well and growing
I often say this- you never think esops as compensation for paying lower CTC. ESOPs are only compensation for the risk you are taking and trusting the company/team/founders.
Whenever someone asks me about taking a pay cut and going to a startup, I ask them to be doubly sure and don’t go just because they are offering a lot of esops.
I joined at a pay cut in startup but really thought the team and idea was really good
These days new startups year of expiry is unlimited
Also in buy back your stocks need to be vested + some cap is there . Toh at max 10% of vested you can use for buy back