In response to Bill Gurley's essay on "dirty termsheets" J. Lemkin argues that if you believe the company you work for can be worth >=10x the amount Crunchbase says they’ve raised then go for it!! If not and the company has raised $200m there’s a good chance your equity will be worthless as an employee.
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Why “Dirty Term Sheets” Don’t Really Matter (and the 10X Rule)
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Rough-and-tough, figure on this rule: a company has to be sold, or IPO, for a valuation >= 10x the amount of capital invested for everyone to make any real money. If this happens, everyone wins, and the “lay” employees (who often own a very small % of the company) should be in the money. So do the best you can with this analysis: Do I believe the company I am working at can be worth >=10x the amount Crunchbase says they’ve raised?
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