The full cap table probably not. But you generally don't need that to ascertain the most important parts of startup compensation.
I generally ask these questions:
1. What was the pre/post money valuation of the company at the last round.
2. How much runway do they have right now including already planned increases in burn (i.e hiring plans for the quarter/year).
3. What % interest in the company would my options grant represent? (you use this in combination with the information about the valuation to determine value of said grant)
4. Who are the major non-founder investors in the company? (this is generally public knowledge because investors love to announce these but it's worth asking). Sometimes the CEO will also divulge details about how they work with their investors, level of involvement, board seats etc. CEOs love to talk about these things for some reason.
5. When do they plan to raise money next and do they feel like they are meeting the metrics required for an up round? If not then how does my hiring or other planned hiring seek to address that?
The last question is actually really important and generally how I a) tie my employment to actual value at the company and b) justify my compensation in negotiation stage and/or later negotiations when I can show how my performance has directly affected these important metrics.
Any company worth their salt at the sort of stage where these questions are relevant will answer these, the degree of detail will depend on transparency of the leadership.
Generally speaking when looking to join a company of this size you will be meeting with the CEO, usually after meeting everyone else and before negotiating compensation - that is when you ask these questions and this is exactly what that meeting is for.
If they don't want to answer these then take that as a sign things are worse than they seem and perhaps negotiate for a more cash rich compensation and don't bet hard on the companies future.
It's interesting sure but generally speaking if that comes into play you are already getting nothing. Use the time and patience of the CEO wisely IMO, ask the most important questions and focus on the risk/reward of the optimistic case. The downside case you are always getting nothing even if the preferences would imply something investors make sure you get screwed first.
How can you gauge the optimistic case if you don't know the risk?
Interview stage: Can you share with me what the liquidation preferences look like?
The company can either say, yes, (good sign, they are at a minimum confident, but also possibly competent) or the company can say no (What are they hiding?)
And you are right, if liquidation preferences are on the table, you should expect your equity to be worth 0. At that point does that change your calculus working with the co?
All of your questions above + liquidation prefs are key IMO
I would disagree. Presumably the individual taking a job at this startup has other offers, or other jobs they could get - they are taking some risk by joining the startup.
If everyone wants to say that the equity is fake... then ok, it's fake and we can move on. If the firm is representing 50k options are a lot, then I should be able to put a dollar value on those options. In most cases, an employee will expect to get something in between the downside of nothing, and the upside of infinity dollars. The liquidity preference determines whether you in fact get nothing, ever.
Source: Worked at a firm with a 2x liquidity preference on a Series D which ultimately didn't move the needle for the company. Realized ~1.5 years in that the equity would have inconsequential worth in any reasonable outcome for the company.
It would be better to use the market cap of the currently dominant company in the sector to compute the upside (unless the startup is doing something completely novel, like autonomous robotics or nuclear fusion, in which case the risk is so high there's no point in doing the math.)
Never the less, thats what this is usually sold as. For Series B+ companies, the marginal probability that they only achieve marginal equity growth is quite high. This is problematic for the employee, as there is no natural stopping point after Series B - one could labor indefinitely for worthless equity. Seed and A are really just getting off the ground, and agree that if a preference stack matters - the startup likely failed to get off the ground.
I'm not sure that's a high value-to-combativeness question, but I've known of some companies volunteering that they've only done clean term sheets ( vs https://carta.com/blog/watch-out-for-these-terms/ )
Whatever went into taking a down round or having to sign off on something worse than a 1x liquidation preference from a VC is bound to be a touchy subject so I'd word the question tactfully.
I generally ask these questions:
1. What was the pre/post money valuation of the company at the last round.
2. How much runway do they have right now including already planned increases in burn (i.e hiring plans for the quarter/year).
3. What % interest in the company would my options grant represent? (you use this in combination with the information about the valuation to determine value of said grant)
4. Who are the major non-founder investors in the company? (this is generally public knowledge because investors love to announce these but it's worth asking). Sometimes the CEO will also divulge details about how they work with their investors, level of involvement, board seats etc. CEOs love to talk about these things for some reason.
5. When do they plan to raise money next and do they feel like they are meeting the metrics required for an up round? If not then how does my hiring or other planned hiring seek to address that?
The last question is actually really important and generally how I a) tie my employment to actual value at the company and b) justify my compensation in negotiation stage and/or later negotiations when I can show how my performance has directly affected these important metrics.
Any company worth their salt at the sort of stage where these questions are relevant will answer these, the degree of detail will depend on transparency of the leadership.
Generally speaking when looking to join a company of this size you will be meeting with the CEO, usually after meeting everyone else and before negotiating compensation - that is when you ask these questions and this is exactly what that meeting is for.
If they don't want to answer these then take that as a sign things are worse than they seem and perhaps negotiate for a more cash rich compensation and don't bet hard on the companies future.