HACKER Q&A
📣 mikeschmatz

What are the downsides of taking a VC round with high valuation?


Was approached by a small startup valued at $1B. <100 employees, pre-market, early beta product.

Other than expensive stock options, any other reasons to be concerned about such unusually high valuation?

Thanks!

  👤 ThrowITout4321 Accepted Answer ✓
If the company needs additional cash and it does not meet the current expectations it might be hard to keep the value at its current level. I would count the options' value at $0 when considering the job's compensation package.

The options are a bonus for you taking the risk of working for the startup. Make sure you get paid market value for your work since those options are likely to be underwater relatively fast.