The honest cap table
Your equity has matured into nothing.
We model your stock options through the entire liquidation stack and return the most accurate number in venture. It is $0.00. We've enclosed a certificate suitable for framing.
Modeled for 12,418 former believers and counting
Class · Common · Non-transferable
This certifies that the bearer,
A Reasonable Person
is the recorded holder of
common shares
in [REDACTED], Inc., redeemable for
Performance, fully transparent
- $0.00returned to common shareholders
- $80,000,000preference stack satisfied ahead of you
- 100%of the upside captured by preferred holders
- $2.4Mpromised in the offer letter
- 4 yrsvested before the number resolved to zero
- 0founders affected by this outcome
The signature instrument
The liquidation waterfall
A $80,000,000 acquisition sounds enormous. Watch it pour down the preference stack. Each tier drinks in order of seniority. By the time it reaches you, the glass is dry and the analogy is over.
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Senior
Venture debt Senior secured · paid first, always−$10,000,000 $70,000,000 left
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1
Series C preferred 1.5× participating · the double dip−$30,000,000 $40,000,000 left
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2
Series B preferred 1× non-participating−$22,000,000 $18,000,000 left
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3
Series A preferred 1× · drinks the last drop−$18,000,000 $0 left
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Common shareholders — you Paid last, from whatever remains. Nothing remains.$0.00 dry
$10M + $30M + $22M + $18M = $80M. The arithmetic is honest. Series C's participation only bites on whatever is left over — and nothing is left over. It was always going to add up to everyone but you.
The lifecycle of getting nothing
Five steps, four years, one number
It isn't a single dramatic event. It's a schedule. Here is the schedule.
-
01
Join, and take the pay cut
You take eighteen percent below market because the equity will make up the difference. You sign with a good pen. Everyone seems excited for you.
-
02
Vest through the cliff
Twelve months to your first shares, four years to the rest. They accrue on time, like rent. You decline two recruiters and tell your partner it'll be worth it at the exit.
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03
Become a paper millionaire
A secondary valuation lands in the all-hands. You multiply your shares by the new 409A and screenshot it. You do not yet know what participating means.
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04
The exit, and the preference
An acquisition is announced at a number that sounds enormous. Series C is made whole. Then B. Then A. The money is real, and it is moving, and it is not moving toward you.
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05
You get nothing
Common stock is paid last, from whatever remains. Nothing remains. Your statement reads $0.00. We've taken the liberty of framing it.
The honest estimator
Model your equity. Receive your nothing.
Enter the figures from your grant. We run them through a real cap table — senior debt first, then the preference stack, then you. The number at the bottom is the only one that's yours.
The same cap table as the waterfall above: $10M senior debt · $70M of stacked liquidation preferences · 100,000,000 shares fully diluted. Common is paid only after the first $80,000,000 is satisfied. Your exit is not larger than that. Nobody's is.
Held by uncommonly trusting people
Voices of the common shareholder
"HR called it a liquidity event. For me it was more of a clarity event."
"I read the offer letter eleven times. I read the term sheet zero times. The term sheet read me."
"We hit every milestone. The company succeeded. I just wasn't a creditor — I was a believer, and believers settle last."
"I built something I was proud of. The cap table didn't care. That's allowed."
The fine print you agreed to
A plain-language glossary
The terms were always in the documents. The documents were always somewhere else.
- Liquidation preference
- A contractual guarantee that investors get their money back before you get yours. The preference is theirs. You are the thing being preferred against.
- Participating preferred
- Investors get their money back and a slice of what's left. Double-dipping, formalized. They eat first and then they eat your portion too.
- Preference overhang
- The total that must be paid to investors before your shares are worth a penny. Usually larger than the company will ever sell for. The wall between you and money, measured in millions.
- Underwater
- When your strike price is higher than the stock is worth, so exercising means paying extra to own a loss. Fully vested, completely worthless.
- The 90-day window
- The 90 days after you leave to spend money you don't have on stock you can't sell, or forfeit it forever. The only part of your equity that runs on time.
- AMT
- A tax on profit you haven't received, from selling stock you can't sell. The IRS taxes your imaginary gains in real dollars. The bill is not imaginary.
- Drag-along
- The clause that lets the big shareholders force you to approve a sale that pays you $0. You agreed to be dragged. It's in the agreement you didn't read.
- Common shareholder
- You. Last in line at every event that distributes money. "Common" describes the stock, not the people. The people were, in fact, exceptional. The stock simply pays last.
Frequently rationalized questions
You have questions. The number has answers.
But my offer letter said it was worth $2.4 million.
Your offer letter quoted a number of shares multiplied by a hopeful valuation, which is a sentence, not a payment. After the preference stack is satisfied, the value attributable to common stock is $0.00. The letter was accurate about the multiplication and silent about the subtraction.
The company sold for a lot. Where did my share go?
It went up the stack. Series C is made whole, then B, then A, then the notes and the venture debt. Each one is paid in full before you are considered. You are not, in the end, considered.
Couldn't I have negotiated this?
The instrument you would negotiate is the term sheet, which is signed before you arrive and shown to you never. You negotiated your title. This is not a criticism. It is just where the lever was.
Can I at least frame the certificate?
Yes. The engraved instrument is suitable for framing and has been pre-stamped VOID at no additional cost. It will appreciate sentimentally at a rate we do not guarantee.
Is this number final?
The number is $0.00. It is as final as zero is, which is extremely. We will, however, recalculate it for free as many times as you'd like to sit with it.
Did the founders get nothing too?
No.
Get nothing, delivered
One honest figure in your inbox whenever a beloved startup exits and forgets to pay the people who built it. No upside. No spam. No equity.
You're in. Expect nothing, on schedule.
That doesn't look like an email. Even nothing needs somewhere to arrive.