5 ms·

The first day (actual founder) or the day before the papers are for the A round are officially signed. These are the actual and only correct answers. If you ar

The first day (actual founder) or the day before the papers are for the A round are officially signed. These are the actual and only correct answers. If you are the founder you get the best deal overall on expected value. If your offer is generated before the A Round closes, you can negotiate equity at a pre-A-round valuation, but you are never exposed to any pre-A-round risk, and you can negotiate a post-A round salary that is contingent on the round closing.

heurist 11y ago
What would you say is a good amount of equity for being an early engineer (effectively technical lead) at a seed-stage startup? I'm at my first and don't know if I'm being compensated fairly, though I do enjoy the work greatly.
- birken 11y ago
  Depending on your skill level relative to everybody else, probably 2-5% would be a good range, though it also would depend on what your salary is. Less than 2% and either you are being paid a lot or you aren't that important to the team (or you are important and are underpaid).
  - dpeck 11y ago
    2-5% seems high from what Ive seen, can you name any startups that were successful with early engineer(s) near the top of that range?
    - birken 11y ago
      Sure, at Thumbtack my initial offer was towards the top of the range to be the first hire there (I actually negotiated for less equity and more money, but they wanted me to take more equity... oops!). Worked out pretty well.
  - mpdehaan2 11y ago
    I think 1% to even 0.5% is pretty likely - at which price maybe you might have to accept something maybe 15-20% below market. I would love to see early developers at this stage get 2-5%, though I think that would be hard for some to push all the way through (past the CEO if applicable, board who has to sign off on the cap table and doesn't want the option pool to be too low too soon, etc). But would it be fair if you are good and putting in that much work? Hell yes. But likely you're good, and hopefully the work/life balance isn't that lopsided either. Are you going to get it? Unlikely.
    - birken 11y ago
      In my example I'm talking about a seed stage startup where the engineer being hired is going to be a critical part of the team and has relevant experience. No board, no major dilution yet. Don't get me wrong, 2% is much more applicable than 5%, but I don't think 5% would be unheard of. A month ago I talked with a founder of a company with a huge angel round in the bank looking for an experienced technical lead, and he was very comfortable giving ~2-3% equity for it (smart guy!). Perhaps 0.5%-1% is more common, but that doesn't mean you should take the job at that level. I was answering the question of what this type of hire is worth, not what they commonly get.
    - justin_vanw 11y ago
      I joined Milo.com about a month after the A round was closed, everyone post-A was given between 0.1 and 0.3%. If you are joining early seed round, you would probably expect around 30k in salary and between 1% and 5%. The question is how much do they want you to join, and can you sell yourself a little bit. Find out what their pain points are that you think you can honestly attack on day #1 of joining, and make sure they know you intend to fix those problems ASAP. Then tell them what you think is fair, and let them agree to that (or don't join). As an engineer you shouldn't try to negotiate too much with a founder because: If they are bad at negotiating, the startup is going to fail, and if they are good at negotiating they are going to convince you to take a really bad deal (and you will be happy about it). If you are an engineer that is good negotiating, you shouldn't be joining someone else's startup (you should be working on your startup, even if you are 15).
- jusben1369 11y ago
  Where seed = less than US $1 million raised? Then it would depend on how many of the founders are good developers. I would say 3, 2, 1% based on whether you're the 1, 2nd or 3rd (including the founders) FT developer/s. Salary should be 70/80/85% of market inverse to the equity amount. If they're offering less than 70% market then I'd add 1% for every 10% delta. (ie 50% of market cash = 5% equity)
thinkingkong 11y ago
Or you can negotiate your % regardless and not base it on monetary value. This has less of an impact pre and post series A. A raise takes awhile so you really want to do your pre series-A "timing" like half a year before when things are still uncertain enough to be negotiable, but good enough to be probable.
doughopkins 11y ago
Is this because the investors will exert considerable pressure on management not to give away many percentage points? But the theory is that managers, even knowing that, might be willing to sneak them in just before it closes? Won't this leave you with a huge tax bill, since the differential between the strike price and market price is so great? Options aren't worth anything if you can't afford to exercise them, so might a slightly smaller percentage after an A-round actually be preferable in practical terms?

heurist 11y ago

What would you say is a good amount of equity for being an early engineer (effectively technical lead) at a seed-stage startup? I'm at my first and don't know if I'm being compensated fairly, though I do enjoy the work greatly.

birken 11y ago
Depending on your skill level relative to everybody else, probably 2-5% would be a good range, though it also would depend on what your salary is. Less than 2% and either you are being paid a lot or you aren't that important to the team (or you are important and are underpaid).
- dpeck 11y ago
  2-5% seems high from what Ive seen, can you name any startups that were successful with early engineer(s) near the top of that range?
  - birken 11y ago
    Sure, at Thumbtack my initial offer was towards the top of the range to be the first hire there (I actually negotiated for less equity and more money, but they wanted me to take more equity... oops!). Worked out pretty well.
- mpdehaan2 11y ago
  I think 1% to even 0.5% is pretty likely - at which price maybe you might have to accept something maybe 15-20% below market. I would love to see early developers at this stage get 2-5%, though I think that would be hard for some to push all the way through (past the CEO if applicable, board who has to sign off on the cap table and doesn't want the option pool to be too low too soon, etc). But would it be fair if you are good and putting in that much work? Hell yes. But likely you're good, and hopefully the work/life balance isn't that lopsided either. Are you going to get it? Unlikely.
  - birken 11y ago
    In my example I'm talking about a seed stage startup where the engineer being hired is going to be a critical part of the team and has relevant experience. No board, no major dilution yet. Don't get me wrong, 2% is much more applicable than 5%, but I don't think 5% would be unheard of. A month ago I talked with a founder of a company with a huge angel round in the bank looking for an experienced technical lead, and he was very comfortable giving ~2-3% equity for it (smart guy!). Perhaps 0.5%-1% is more common, but that doesn't mean you should take the job at that level. I was answering the question of what this type of hire is worth, not what they commonly get.
  - justin_vanw 11y ago
    I joined Milo.com about a month after the A round was closed, everyone post-A was given between 0.1 and 0.3%. If you are joining early seed round, you would probably expect around 30k in salary and between 1% and 5%. The question is how much do they want you to join, and can you sell yourself a little bit. Find out what their pain points are that you think you can honestly attack on day #1 of joining, and make sure they know you intend to fix those problems ASAP. Then tell them what you think is fair, and let them agree to that (or don't join). As an engineer you shouldn't try to negotiate too much with a founder because: If they are bad at negotiating, the startup is going to fail, and if they are good at negotiating they are going to convince you to take a really bad deal (and you will be happy about it). If you are an engineer that is good negotiating, you shouldn't be joining someone else's startup (you should be working on your startup, even if you are 15).
jusben1369 11y ago
Where seed = less than US $1 million raised? Then it would depend on how many of the founders are good developers. I would say 3, 2, 1% based on whether you're the 1, 2nd or 3rd (including the founders) FT developer/s. Salary should be 70/80/85% of market inverse to the equity amount. If they're offering less than 70% market then I'd add 1% for every 10% delta. (ie 50% of market cash = 5% equity)

thinkingkong 11y ago

Or you can negotiate your % regardless and not base it on monetary value. This has less of an impact pre and post series A. A raise takes awhile so you really want to do your pre series-A "timing" like half a year before when things are still uncertain enough to be negotiable, but good enough to be probable.

doughopkins 11y ago

Is this because the investors will exert considerable pressure on management not to give away many percentage points? But the theory is that managers, even knowing that, might be willing to sneak them in just before it closes? Won't this leave you with a huge tax bill, since the differential between the strike price and market price is so great? Options aren't worth anything if you can't afford to exercise them, so might a slightly smaller percentage after an A-round actually be preferable in practical terms?