As an early stage engineer that was bought out by a FAANG, I can assure you that most of the hype surrounding buyouts is mostly an exaggeration.
Sure some people get millions, but most people do not, even early stage engineers.
Think about it, you as an engineer, have deliberately avoided working at $bigCorp, and are about to be given $5m in shares. Would you continue working at $bigCorp? no, you'd take the money and fuck right off.
Ok Ok you say, but look at the headline buyout figures Google buys a company for "450 million" that startup having raised 65m in capital for a valuation of x.
so, you as an employee have an option for 0.1%. Awesome, you're gonna get 450k right?
No.
The 450M is the headline figure, The PR figure. Its not actually how much the company is bought for (well it rarely is)
Google will pay off the 65M from investors, plus some amount, maybe give some shares. This will value the company at say 85-100M in terms of cash paid for actual shares.
oh sweet, so you'll get 0.1% of 100M right? well not always. There is debt seniority and weird structures that mean that certain investors are paid more per share than others.
So it might mean that the pool of employee money would be 10M or 1M. or even none. The structure is normally bespoke and deliberately opaque.
Ok, so fuck, not that much money.
If you are lucky, you'll get a job offer from google. This is where the head line figure comes in. Say Google pays 100M for the actual company, in actual cash, the rest of that headline figure comes from share offerings.
That is, if you join google, you'll get the standard level of pay, plus the normal share offer. However you'll then get an additional share offer from the headline figure. This could be double, or many multiples of the normal share offering.
TL;DR:
The headline buyout figure for startups is mostly fiction. You'll only get lots of money, if you are part of the 0.01% that IPO and stay long enough to get the full offering, even then thats not a given. The second best outcome is getting bought out and serving your golden handcuff period.
Sure some people get millions, but most people do not, even early stage engineers.
Think about it, you as an engineer, have deliberately avoided working at $bigCorp, and are about to be given $5m in shares. Would you continue working at $bigCorp? no, you'd take the money and fuck right off.
Ok Ok you say, but look at the headline buyout figures Google buys a company for "450 million" that startup having raised 65m in capital for a valuation of x.
so, you as an employee have an option for 0.1%. Awesome, you're gonna get 450k right?
No.
The 450M is the headline figure, The PR figure. Its not actually how much the company is bought for (well it rarely is)
Google will pay off the 65M from investors, plus some amount, maybe give some shares. This will value the company at say 85-100M in terms of cash paid for actual shares.
oh sweet, so you'll get 0.1% of 100M right? well not always. There is debt seniority and weird structures that mean that certain investors are paid more per share than others.
So it might mean that the pool of employee money would be 10M or 1M. or even none. The structure is normally bespoke and deliberately opaque.
Ok, so fuck, not that much money.
If you are lucky, you'll get a job offer from google. This is where the head line figure comes in. Say Google pays 100M for the actual company, in actual cash, the rest of that headline figure comes from share offerings.
That is, if you join google, you'll get the standard level of pay, plus the normal share offer. However you'll then get an additional share offer from the headline figure. This could be double, or many multiples of the normal share offering.
TL;DR:
The headline buyout figure for startups is mostly fiction. You'll only get lots of money, if you are part of the 0.01% that IPO and stay long enough to get the full offering, even then thats not a given. The second best outcome is getting bought out and serving your golden handcuff period.