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From the data it looks like they get more or less an average market salary for e.g. architect, team lead, project manager position. What really surprised me was

by kavalg 5y ago

From the data it looks like they get more or less an average market salary for e.g. architect, team lead, project manager position. What really surprised me was the equity that they keep until series A (below 20%). I expected something at least around 35% for a successful startup that even makes it to series A.

PragmaticPulp 5y ago
> What really surprised me was the equity that they keep until series A (below 20%). I expected something at least around 35% for a successful startup that even makes it to series A. Keep in mind that it’s common to have at least one cofounder. Some times more. Start with 3 cofounders and an equal split and already nobody can have more than 33% of the company. The term “Series A” has also become kind of diluted away by a growing list of earlier rounds: Angel, pre-seed, seed, etc. It’s getting kind of funny to see how much fundraising a company can do before “Series A” these days. Equity is a tough topic to think about because everyone expects to have a lot, but numerically a startup with multiple cofounders and multiple investment rounds and an employee option pool and equity for early hires will end up with a lot of entries on the cap table. It becomes difficult for any one person to have >20% equity very quickly in most cases. At startups I often had to explain this to early but post-investment hires who expected 10% or more equity for themselves on top of market rate salaries. Unfortunately the equity gets spread across a lot of different parties.
- ilrwbwrkhv 5y ago
  It's crazy that Elon Musk still has 17 percent of Tesla and founders are giving away more than that just by series A. Is it because they are not creating anything truly unique with great market pull?
  - whatshisface 5y ago
    It is because they aren't self-funding in the way that an ex-Paypal billionaire can. Elon Musk started Tesla with enough money to be a VC himself, but put it in to his own companies. Normal SWEs can follow this example by saving up and being willing to work for a big discount if it's their own company they're working on. That's not going to let you start a car company but for a website it might be enough.
    - SmellTheGlove 5y ago
      > Elon Musk started Tesla with enough money to be a VC himself, but put it in to his own companies. Didn't he _not_ start Tesla, though? I thought he bought his way in, and negotiated cofounder status?
  - duped 5y ago
    I'm not an expert in this, but most startups that have tried to recruit me in series A/B have such small ambitions (or more quantitatively, TAM) that I can understand why investors want higher stakes. If your TAM and desired market capture implies revenue of less than like $500 million the company is never going to IPO, just for example. Side note, as a potential employee (and a different kind of investor) that's the determining factor in whether or not the equity vs paycut gamble makes sense.
    - neilc 5y ago
      > If your TAM and desired market capture implies revenue of less than like $500 million the company is never going to IPO, just for example. The vast majority of tech companies that IPO have revenues of (much) less than $500M.
  - KptMarchewa 5y ago
    Musk bought his shares at series A.
sam0x17 5y ago
From what I've seen anything over 5% is usually ridiculous. At least for startups on a track to a billion $ valuation, most startups of this caliber (or that see themselves as being of this caliber, key point) will be in situations where each cofounder has 1-2% at most and the rest is kept aside for later rounds, employees, eventually going public, etc. Your mileage may vary, but that is what I've seen.

by kavalg 5y ago

PragmaticPulp 5y ago

> What really surprised me was the equity that they keep until series A (below 20%). I expected something at least around 35% for a successful startup that even makes it to series A. Keep in mind that it’s common to have at least one cofounder. Some times more. Start with 3 cofounders and an equal split and already nobody can have more than 33% of the company. The term “Series A” has also become kind of diluted away by a growing list of earlier rounds: Angel, pre-seed, seed, etc. It’s getting kind of funny to see how much fundraising a company can do before “Series A” these days. Equity is a tough topic to think about because everyone expects to have a lot, but numerically a startup with multiple cofounders and multiple investment rounds and an employee option pool and equity for early hires will end up with a lot of entries on the cap table. It becomes difficult for any one person to have >20% equity very quickly in most cases. At startups I often had to explain this to early but post-investment hires who expected 10% or more equity for themselves on top of market rate salaries. Unfortunately the equity gets spread across a lot of different parties.

ilrwbwrkhv 5y ago
It's crazy that Elon Musk still has 17 percent of Tesla and founders are giving away more than that just by series A. Is it because they are not creating anything truly unique with great market pull?
- whatshisface 5y ago
  It is because they aren't self-funding in the way that an ex-Paypal billionaire can. Elon Musk started Tesla with enough money to be a VC himself, but put it in to his own companies. Normal SWEs can follow this example by saving up and being willing to work for a big discount if it's their own company they're working on. That's not going to let you start a car company but for a website it might be enough.
  - SmellTheGlove 5y ago
    > Elon Musk started Tesla with enough money to be a VC himself, but put it in to his own companies. Didn't he _not_ start Tesla, though? I thought he bought his way in, and negotiated cofounder status?
- duped 5y ago
  I'm not an expert in this, but most startups that have tried to recruit me in series A/B have such small ambitions (or more quantitatively, TAM) that I can understand why investors want higher stakes. If your TAM and desired market capture implies revenue of less than like $500 million the company is never going to IPO, just for example. Side note, as a potential employee (and a different kind of investor) that's the determining factor in whether or not the equity vs paycut gamble makes sense.
  - neilc 5y ago
    > If your TAM and desired market capture implies revenue of less than like $500 million the company is never going to IPO, just for example. The vast majority of tech companies that IPO have revenues of (much) less than $500M.
- KptMarchewa 5y ago
  Musk bought his shares at series A.

sam0x17 5y ago

From what I've seen anything over 5% is usually ridiculous. At least for startups on a track to a billion $ valuation, most startups of this caliber (or that see themselves as being of this caliber, key point) will be in situations where each cofounder has 1-2% at most and the rest is kept aside for later rounds, employees, eventually going public, etc. Your mileage may vary, but that is what I've seen.