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I know its usual for people to take a salary hit when joining a startup but £16,800 a year is nothing. You're asking for someone to have either a lot of passion

I know its usual for people to take a salary hit when joining a startup but £16,800 a year is nothing. You're asking for someone to have either a lot of passion and belief in what you're doing or a lot of naivete. If they have the passion, belief, experience and willing to take that kind of salary, they'll most likely be looking for third co-founder, not first employee and thus a MUCH higher percentage. Decent developers will get co-founder offers all the time, i'm an at best, average developer (i have other skills), but i have a good portfolio and experience, and i get at least 1 company a month asking me to become involved with their company on an equity basis. I'd say the company should be looking for their last co-founder, not their first employee. If its an employee they're looking for, the wage should be in-line with market wages and the 2% is great, but lets face it, might be worth nothing.

danshapiro 12y ago
This advice (and much of the advice in the thread) pooh-poohs what they've done and says that you should be a cofounder. I think that the offer does not fairly reflect your value, but this advice also doesn't fairly reflect what they've brought to the table. If the company has created a prototype that's received $150,000 in crowdfunding support, that's a tremendous accomplishment. The existing founders have conceived of a product, prototyped it, and validated it in the most significant way possible - with customers who are willing to not just pay for it, but pay for it far in advance. Let me put this in perspective: on Kickstarter, raising $100,000 puts a company in the top 0.2% of successful campaigns [1]. If you include all campaigns, they're rarer than 1-in-a-thousand. Due to selection bias, we hear about these >$100k campaigns preferentially, but the company is breathing rarified air. That indicates there's real value that's already been created by the founders. That said, 2% and a smidge over minimum wage isn't right either. The compensation hit you're taking is so significant that the equity position should be larger. I would be looking for something in the 5-10% range. The question I would ask them is this: the accelerator put in $50k. You're forgoing much more money than that. The accelerator got 6%. Do they expect you to provide more or less value over the next four years than the accelerator did in 3 months? Also, while verbal promises are legally binding (in the US and I believe in the UK as well), they're hard to prove. The suggestions to get the "salary after funding" agreement in writing is a good one. [1] https://www.kickstarter.com/help/stats https://www.kickstarter.com/help/stats

danshapiro 12y ago

This advice (and much of the advice in the thread) pooh-poohs what they've done and says that you should be a cofounder. I think that the offer does not fairly reflect your value, but this advice also doesn't fairly reflect what they've brought to the table. If the company has created a prototype that's received $150,000 in crowdfunding support, that's a tremendous accomplishment. The existing founders have conceived of a product, prototyped it, and validated it in the most significant way possible - with customers who are willing to not just pay for it, but pay for it far in advance. Let me put this in perspective: on Kickstarter, raising $100,000 puts a company in the top 0.2% of successful campaigns [1]. If you include all campaigns, they're rarer than 1-in-a-thousand. Due to selection bias, we hear about these >$100k campaigns preferentially, but the company is breathing rarified air. That indicates there's real value that's already been created by the founders. That said, 2% and a smidge over minimum wage isn't right either. The compensation hit you're taking is so significant that the equity position should be larger. I would be looking for something in the 5-10% range. The question I would ask them is this: the accelerator put in $50k. You're forgoing much more money than that. The accelerator got 6%. Do they expect you to provide more or less value over the next four years than the accelerator did in 3 months? Also, while verbal promises are legally binding (in the US and I believe in the UK as well), they're hard to prove. The suggestions to get the "salary after funding" agreement in writing is a good one. [1] https://www.kickstarter.com/help/stats https://www.kickstarter.com/help/stats