We use a matrix system to calculate share options at cord. This Matrix was originally created by Index ventures and has been adopted by progressive technology companies around the world.
Source, Index Ventures: Size of option grants by level and function, expressed as a % of base salary
This matrix takes into account 4 core things
The equation: a case study
Key info
Current valuation: Notional valuation as of 8/8/23: £18,810,000
Current share price: The fully diluted share price is the valuation, divided by the sum of all fully diluted shares.
Valuation: cord’s valuation is calculated by taking our current ARR and multiplying it by 5.7x
The equation
[Insert % from matrix] x [insert base salary] = Y
Y divided by current share price = number of options granted
Issuing share options
Technically speaking, issuing shares options only happens once every year or so. It takes place within 90 days of HMRC agreeing the company valuation we put forward.
To negate this, we issue a ‘share promise’ - that outlines how many share options will be issued to you at the next valuation.
We do the valuation at the beginning of every year. We are fortunate that the price per share (and valuation) we are able to agree with HMRC is nominal/low and it is likely the valuation will remain this way for the foreseeable future.