4 ms·
Ask HN: Startup equity – am I being lowballed?
As a lead/staff engineer, I was recently offered 0.1% equity at a post Series A startup after working at it for almost a year. It's the 1st grant and vesting started at day 1.
While on paper they say this grant could be worth $1m if startup is valued at $1b, it's still only 0.1% of the company and $50k at the last valuation.
Strike price is really low but I am still wondering if I am being lowballed?
- anon84873628 2y agoIt seems like you _feel_ you are being lowballed. To know for sure we'd have to know how many other employees and how much you contribute, right? Were you not given equity when you started a year ago? Was it still Series A at that time?
- thr02 2y agoI can say that I contribute on par with the CTO and there's not many tech staff. The company isn't very sexy tech and definitely isn't AI. This grant was given a year ago when I started but was communicated to me only recently.
- LordJim 2y ago> This grant was given a year ago when I started but was communicated to me only recently. This is very strange. Normally you'd have to sign to accept the options as soon as they are granted, even if they have a 1 year vesting cliff.
- getwiththeprog 2y agoIf there are not many tech staff then you probably deserve more. Unless your salary is really high now.
- thr02 2y agoHow much more?
- thr02 2y agoAnd yes, there wasn't a new round of funding since I started, only some additional money from the same investors afaik.
- coderintherye 2y agoProbably, but what's your negotiation position? If you believe management is amendable and just needs data, then pull data for typical equity grants at this stage to your equivalent position and present it to them. If not amenable, then decide if you are prepared to walk away and then if so set an ultimatum for a market-rate grant. Also, regarding "$1m if startup is valued at $1b, it's still only 0.1%" it's actually quite likely to get diluted by that point. You should ask them if the shares are non-dilutive or not (unlikely to be protected from dilution).
- thr02 2y agoMy negotiation position is fairly weak at the moment since I am not actively searching and didn't mean to. So I guess anything except "I am quitting" is fairly weak. As to the typical equity grants at this stage, this is exactly what I am looking for. Could you recommend something trustworthy and up-to-date?
- LordJim 2y agoI don't think you're necessarily being lowballed. 0.1% is a reasonable number for a hands-on engineer in series A. Keep in mind that startups typically have maybe 20% of their equity allocated as the pool for stock option grants, and they guard that very closely. They need to reserve possibly multiple % for early executive hires such as VP of engineering or head of sales as they grow. Also don't buy BS like "they say this grant could be worth $1m if startup is valued at $1b". Not only is there a small chance of them ever getting to a $1B valuation, you would mostly likely be diluted between now and then by additional funding rounds.
- thr02 2y agoThank you. The equity pool in our company is less than 20% afaik.
- toomuchtodo 2y agoReasonable grant for org stage and contributions. If you don’t have better options immediately, thank them for the grant and move on until you decide you no longer enjoy the work or you find a better opportunity (comp + equity). Also, don’t get hung up on it too much. It’s just a lottery ticket.
- thr02 2y agoThis is a helpful perspective, thank you.