

Ask HN: Should I ask for 1% pre or post-money? - FastQuestion

I&#x27;ve been offered 1% as a reward for the work I have done, we agreed that this shares should be vested, the condition is that I will only get the 1% if or when the business closes the VC round. Should I ask for 1% pre or post-money? If I understand correctly, I should ask for 1% post-money as the business will be worth more post-money. Apologies for such a rudimentary ask, I just don&#x27;t want to screw up the basics.
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findpaddy
Yes, Post Money. The Company is worth more, because the valuation also
includes the actual money put in by the investor. E.g.

Pre Money Valuation : $10m Investment : $5m Post Money Valuation : 10 + 5 =
$15m

1% of $10m < 1% of $15m

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rahimnathwani
If you can spare the time, read 'Venture Deals' by Brad Feld and also
[http://blog.alexmaccaw.com/an-engineers-guide-to-stock-
optio...](http://blog.alexmaccaw.com/an-engineers-guide-to-stock-options)

Also, it's not clear from your post what you mean by 'shares should be
vested'. Do you mean one of the following?

\- The shares will be granted immediately, and fully vest only if/when the
business closes the VC round

\- The shares will be granted and fully vest at the same time, only if/when
the business closes the VC round?

\- The shares will be granted if/when the business closes the VC round, but
will vest over some period of time after that

You say that the 1% is being offered as a reward for work you have done. If
the shares are for _past_ work, then there should be no need for them to vest
over a period of years. You've already earned them. If they vest in a normal
fashion (4 year, 25% per year, 1 year cliff) then you're being incentivised
for _future_ work, and not rewarded for previous work.

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FastQuestion
Thank you, this is very helpful, thank you for the reading suggestion.

\- The shares will be granted and fully vest at the same time, only if/when
the business closes the VC round.

\- Shares are for _past_ work. Yes, no need for them to vest over a period of
time. That's what I was trying to convey by 'vested'. What's the best way to
express the same and not leave room for doubt?

I simply do not have the option of getting shares now. The condition is clear,
if/when the VC round closes. This is what I’m getting in writing: 1% post-
money vested at the time of issue. Since I can’t get shares now, is there
anything I can do to be protected against the scenario you described?

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alain94040
Vesting makes no sense in your case, since the work is already done.

I would recommend you get shares now, in writing, properly done. Not at some
future time. While on paper, getting 1% after the VC round sounds better,
because you won't be diluted, in practice, what will happen is that the VC
will tell the founders: "as a condition for my investment, you need to clean
your cap table and renege on your promise to that person".

Whereas if you already got your shares now, there isn't much the VC can do
(except natural dilution).

Summary: get on the cap table now. It's now or never.

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brudgers
More important than pre or post evaluation is in writing. Also more important
is to have the shares If there is a liquidity event without VC ever being
taken.

By the way, if it's pre-money, there's no reason not to have the shares today.
If it's post money and they're coming from the option pool there's little
reason to settle for just 1%.

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grizzles
Yes, especially if you are discussing it in the context of a VC round. After
all you are getting your shares after...

