I'm in negotiations with a Series B startup whose valuation I do not know. What information should I ask for?
How to determine the value of stock options?
Answers
First, their valuation should be fairly easy to find out. Ask for their decks!
Second, they are on their Series B and their valuation will only be important if they are not paying you market rate and the comp package includes options.
Third (and to answer directly your question), from a prospective employee point of view, the more important thing is their cash flow and how long their funds from the previous Series A will last (what if Series B does not turn out well) and how far is Series B going to take them.
Of course, all other decision factors re; start-up VS mature company applies.
If you are receiving stock options, and you consider this an meaningful part of your compensation, I would ask what the fully diluted number of shares outstanding are. Good luck.
The question isn't clear to me. Both Emerson and David have assumed you are in negotiations to go to work for a Series B startup. Is that correct?
The question is not, as Scott M observed, clear. However, in both the case of stock options to be received or investment in a series B, it is simply a matter of asking the company for valuation, which they should be willing to provide.
Stock option values should be at current FMV, which is determined by various methods I won't address. Typically the company knows it.
For a new investment, you should ask what they believe is their current or pre-money value. And it is negotiable (unlike stock options). The value can be determined via comparable transactions or using the Venture Capital method. Full disclosure, I prepared
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