I'm considering working with a startup (not public). As part of my package they have agreed to grant me a 1% stake in the company over 4 years vested every year. This means that if I left after 2 years I would have .5% of a stake vested in the company. When I asked if I would have to put up any of my own money if I left early in order to keep my .5% stake in this example they said that I would have to purchase them based on their current "valuation" of the company.
So in this situation they "value" their company at $100,000,000. In order to get my .5% stake I would have to pay them: .005 * 100,000,000 = $500,000
Or I could decline and leave with nothing.
From what I understand their previous round of investment valued the company at much less than this - probably something closer to $5,000,000. The $100,000,000 figure is a valuation (somewhat optimistic imo) that they are attempting to achieve in their next round of funding.
I haven't worked with Stock Options before - only RSUs which seem much simpler. My question - is this standard operating procedure for Stock Options? If not - what is the correct way to calculate how much one would need to spend in order to keep their partially vested stock options when leaving a not-public company?