Things may be somewhat different in Canada but I’ll try to stay generic so it should fit.
Startups are hard to value and they are essentially only valued when someone makes a monetary investment in them. So investor Aardvark puts in 100k and gets 10% sets a value of 1 million for the company and the value of the shares is calculated from that.
In most cases, employee shares cannot be made liquid unless the company offers to buy them. Most stockplans for startup companies don’t legally allow you to sell your shares to random people, but instead essentially make it so you can only sell to specific entities during specific events. This isn’t actually a red flag as this is common.
However the red flag would be if your company isn’t upfront about current valuation and when investment happens. For two reasons, your an employee and especially in a startup should understand roughly what current financial state company is in. But most importantly you are actually a shareholder, if you’ve excercised options, and they have a responsibility to keep you appraised of what’s happening with shares.
Things may be somewhat different in Canada but I’ll try to stay generic so it should fit.
Startups are hard to value and they are essentially only valued when someone makes a monetary investment in them. So investor Aardvark puts in 100k and gets 10% sets a value of 1 million for the company and the value of the shares is calculated from that.
In most cases, employee shares cannot be made liquid unless the company offers to buy them. Most stockplans for startup companies don’t legally allow you to sell your shares to random people, but instead essentially make it so you can only sell to specific entities during specific events. This isn’t actually a red flag as this is common.
However the red flag would be if your company isn’t upfront about current valuation and when investment happens. For two reasons, your an employee and especially in a startup should understand roughly what current financial state company is in. But most importantly you are actually a shareholder, if you’ve excercised options, and they have a responsibility to keep you appraised of what’s happening with shares.