I work at a pre-launch tech startup and we agreed that I'd receive 2% equity. When I signed paperwork for the shares, there was nothing indicating what % I signed at, just the number of shares.

I realized later that I could have signed for any % and I wouldn't know any better.

What do I need to ask to understand what % I actually own? I'm looking for the proper vocabulary so I can seem less clueless (which I certainly am) when I try and confirm the shares I have are indeed what we agreed on. I don't know if this matters for the context of this question but in case someone were to ask: I have 195,000 shares at $0.17 a share.

  • Do you have a contractual agreement to get 2% or was it the percentage you got when you signed on? Meaning are they legally allowed to dilute your ownership and you're wondering if they have or not?
    – D Stanley
    Dec 22 '20 at 19:57
  • You face huge, substantial problems. Apart from anything else, you may actually have a tax liability right now.
    – Fattie
    Dec 22 '20 at 20:06
  • Are you aware of the difference between "shares" and "options"?
    – Fattie
    Dec 22 '20 at 20:07

Talk to the CFO (or someone in the Finance or Investor Relations Department if you can't go that high up) and ask how many shares are "outstanding" or "issued". Then divide your number of shares by that number to get an ownership percentage.

As a side note, the implicit value of the entire company from your share price is about (195,000 * $0.17 / 0.02) ~= $1.66MM

  • regarding the bizarre "17 cents", I fear our OP has options anyway. of course, if "startup options" there is a large number of very different possibilities :/ OP, google anything like "all about startup options" or "what the hell is this cliff thing?" etc.
    – Fattie
    Dec 22 '20 at 20:09

You need to ask how many shares have been issued and/or authorised in total. Then divide your 195,000 by that number to get your % ownership. Note that more shares may be issued in future, which will reduce your percentage.

  • 1
    Issued and authorized are likely very different; especially for private companies, 'number of shares authorized' is often basically an arbitrarily large number that the company could in the future issue without changing incorporation status. Dec 22 '20 at 20:00

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