Silicon Valley Self Regulation

Story Three

VC Firm Pulls Term Sheet Last Minute

 

At a company that had been private for a long time, some of the early employees have been able to sell their equity at higher prices because of a power dynamic that wasn't addressed ahead of time

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Company building and maturity norms have changed in the tech ecosystem thanks to a number of changes to the larger economic landscape. The typical private life cycle of companies has grown on average, and many companies spend 7+ years without going public. Imagine Green Shark, a successful and carefully managed company based in the Bay. The company was founded in 2006, and has grown to over 1,000 employees. A large contingent of the founding team still occupies many senior leadership positions in the company. Jeff and Josh, two senior level engineers at the firm with seniority, sell some of their shares at $25 per share. Two junior engineers, Clark and Emily, also hope to sell some of their shares at the same time, but are only able to sell their shares at $15 per share. Should the company have addressed these values earlier in their employee agreements and practices to do away with that difference faced by Clark and Emily?