Your startup sells for $100 million. You own 1%. Your payout: $0.

Your startup sells for $100 million. You own 1%. Your payout: $0. It can happen without anyone diluting your stake. Say a fund invested $60 million for 50% of the company, with a 2× non-participating liquidation preference. When the company sells, the fund chooses between taking 50% of the proceeds or receiving up to $120 million before common shareholders get anything. The company sells for $100 million. The fund takes it all. Founders and employees get nothing. The headlines announce a nine-figure acquisition. You walk away with years of work, a below-market salary, and options that paid nothing. Your equity was real. The sale proceeds just never reached your place in the queue. A 2× preference is a tough term. With a more founder-friendly 1× non-participating preference, the fund in this example would take $60 million, leaving $40 million for common shareholders. But when someone offers you “1% of the company,” do you know which terms stand between you and a payout? How much have investors put in? What liquidation preferences do they have? If there are several funds, who gets paid first? Without those answers, multiplying your percentage by a future acquisition price tells you very little. Ask the company to show your payout at a $100 million, $300 million, and $1 billion exit, accounting for all investor preferences. The salary you give up is a specific dollar amount today. You should also run the numbers on what you’re getting in return.