Comment by hn_throwaway_99
1 day ago
Its not great for those who got in later rounds, but I would assume all the investors had at least 1X preferences, so they'll at least get all their money back.
I think this is a pretty decent outcome for Brex. I read they received a total of 1.3 billion in funding, so a 5.15 billion exit isn't bad, especially since the bottom dropped out of the market for so many fintechs that were founded and had big raises between 2015 and 2021.
I'm curious how the employees faired. Seems like they may bet getting nothing out of the deal if the investors get their money back.
These days, most employees getting nothing out of the deal is par for the course for acquisitions, unfortunately. The acquisition price is almost never exchanged directly for shares in the company as implied, often a chunk of it is kept for key personnel retention, etc. Typically just enough goes towards the share purchase to make investors happy, and the rest is structured as incentives for founders and key execs with milestone payouts. That‘s the set of people with leverage towards making the acquisition happen, so that‘s who gets paid.
If you‘re just a regular employee with some options, and the acquirer doesn‘t want to keep you on, you should expect nothing.
> Typically just enough goes towards the share purchase to make investors happy, and the rest is structured as incentives for founders and key execs with milestone payouts.
So they're getting the employees' shares without compensating the employees?
And there's incentives paid to the people who approved the deal, separate from their shares?
(I've heard of liquidation preferences, but never by the person making a job offer with stock options. Bribery also never came up.)
4 replies →
[dead]
Brex has been around for a long time, so employees will have been issued stock options with vastly different exercise prices.
Early employees' options will have value, but more recent options are likely underwater.
I strongly suspect they shifted to RSUs at those valuations.
9 replies →
options can only last 7 years, but brex was founded in 2017.
7 replies →
While I don't think it's the case here, but a lot of time there is more liquidity preference than the deal value so employees can only get what investor want them to pay.
We know how the employees did. Same as ever. They got whatever slop was left in the trough after the big pigs ate their share.
Bitter about VCs? Me? Never.