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All about startup equity : YC Startup Job Guide | Y Combinator

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This section is borrowed with permission from Understanding Startup Stock Options by Ben Belzer. Find Ben on Twitter @benbeltzer7 or work with him at Berbix. And a disclaimer: this is not legal or tax advice. Consult your own professionals before making any decisions. Equity can be a huge incentive for joining a startup early, but knowing when to exercise your options, how to get paid out, how much you’ll make, and how much you’ll get taxed is not at all obvious. It’s important to have a solid understanding of how options work, because the way you use them can have huge financial consequences. A stock option is a contract that gives you the right, but not obligation, to buy a stock at an agreed-upon price and date. The price at which you can purchase the stock is called the exercise price, or strike price. So if your employer grants you 100 options, you do not own 100 shares. Rather, you have the option to buy 100 shares at the aforementioned strike price. Doing so is called exercising

All about startup equity : YC Startup Job Guide | Y Combinator

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