I noticed that an employee getting 1% options in a seed stage company doesn’t seem to get anything unless the exit is > $35M. Not sure that applies to most seed stage companies. Employees of a company I know well would start seeing proceeds after an exit >$5M.
It's because their model assumes "$41 million" was invested into the hypothetical seed company over 4 rounds. Therefore, the company has to exit for more than $41m for the employees' common stock to be worth something.
You have to click on the "How We Guesstimate" button to see their underlying financial assumptions.
In my opinion, this type of "what if?" calculator would be easier to understand if they explicitly showed the intermediate calculation steps in the user interface. A more obvious "show your work" would educate people and preemptively answer questions such as yours about why a $5 million exit nets $0 for employees.
This tool might spark someone's curiosity, but we purposefully built it for a group that didn't want to have to learn about venture finance and still wanted to work at a startup.
But I agree with the premise that the UI for this tool has to be super simple.
Thanks for building this!
Rather than complicating the model here to try to illustrate the difference between exiting at this stage versus raising another round, we went with an approach that demonstrates how preferences work. Even if the number is lower for a Seed company that exits at Series A or higher if it exits at Series C, there is still a number under which you'll get nothing even if the company has a profitable exit.