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That's an interesting angle I hadn't considered. Thanks. The company is UK-based, but are focusing on the US-market (I believe). Would $3-4m sound reasonable f

That's an interesting angle I hadn't considered. Thanks. The company is UK-based, but are focusing on the US-market (I believe). Would $3-4m sound reasonable for the US market?

simonbarker87 12y ago
Hmmmm, only if the investors were US based and potential acquirers were US based. If investment is from UK investors then they are selling parts of their company (shares/equity) in the UK - even if the consumer market (ie where they sell they product) is US based the value of the company is still routed in the UK market. One thing I've learnt over the past few years is that valuations between the US and UK investors seems very different, even in software and so especially in hardware since the product and companies are not as scalable. I'd push for co founder status as others are suggesting with 10-15% stake and 16.8k salary rising to 35-40k, OR 26k rising to 44k with 2% stake, can you get a shorter lock in for the equity? Also, make sure they are aware of the new pension regulations coming in - many start up founders are trying to ignore that.
- walshemj 12y ago
  the new pension regs are more about what you can do with your pensions I think the mandatory employer contributions haven't changed much.
TheOtherHobbes 12y ago
I read the $3-4m as what they're hoping the idea might be worth, one day. I.e. wishful thinking, and irrelevant. Likewise the $500k. Does that depend on a successful funding round? Because if it does, it's a long way from being a sure thing. You're being low-balled on salary and on equity. This doesn't set a good precedent for your future relationship. A competent, trustworthy founder team would do neither. I'd either pass or suggest they pay the market rate for the same level of equity. If they can't afford the market rate - or can't afford it yet - that's Not Your Problem. Of course there's the risk they have something really special. But I'd guess if it's really special, funding will be easier to find and there should be no need to make you take on a financial risk just to work there. Don't forget the Joel Spolsky Company Operating system. He has a solid string of successes, and I don't think he'd operate like this.

That's an interesting angle I hadn't considered. Thanks. The company is UK-based, but are focusing on the US-market (I believe). Would $3-4m sound reasonable for the US market?

simonbarker87 12y ago

Hmmmm, only if the investors were US based and potential acquirers were US based. If investment is from UK investors then they are selling parts of their company (shares/equity) in the UK - even if the consumer market (ie where they sell they product) is US based the value of the company is still routed in the UK market. One thing I've learnt over the past few years is that valuations between the US and UK investors seems very different, even in software and so especially in hardware since the product and companies are not as scalable. I'd push for co founder status as others are suggesting with 10-15% stake and 16.8k salary rising to 35-40k, OR 26k rising to 44k with 2% stake, can you get a shorter lock in for the equity? Also, make sure they are aware of the new pension regulations coming in - many start up founders are trying to ignore that.

walshemj 12y ago
the new pension regs are more about what you can do with your pensions I think the mandatory employer contributions haven't changed much.

TheOtherHobbes 12y ago

I read the $3-4m as what they're hoping the idea might be worth, one day. I.e. wishful thinking, and irrelevant. Likewise the $500k. Does that depend on a successful funding round? Because if it does, it's a long way from being a sure thing. You're being low-balled on salary and on equity. This doesn't set a good precedent for your future relationship. A competent, trustworthy founder team would do neither. I'd either pass or suggest they pay the market rate for the same level of equity. If they can't afford the market rate - or can't afford it yet - that's Not Your Problem. Of course there's the risk they have something really special. But I'd guess if it's really special, funding will be easier to find and there should be no need to make you take on a financial risk just to work there. Don't forget the Joel Spolsky Company Operating system. He has a solid string of successes, and I don't think he'd operate like this.