Watch this YouTube video first

https://youtu.be/fcfVjd_oV1I

I know many people that say they would never work for another startup. Expected to put in long hours in the hope it will pay off someday and in the majority of them, it never does.

Would you still take the job if the company folds in a few years and the equity is worth nothing? How much do you believe in the product and it’s ability to succeed?

What’s your role? How many other employees?

You’re looking at it all wrong.

1. Your equity is factored against the company valuation, not the investment amount. Seed rounds (which is what this probably is, based on the amount) typically buy the investors 25% of the company, meaning they likely invested at a 9M$ pre money valuation, so the total company valuation is currently around $12M. Thus, fully vested, your equity is actually worth $240K.

2. As you pointed out, that is just the *current* value of your equity. If the company is successful (a big if), it can attain a 10x-100x growth over the next 5-10 years. While your equity stake will be diluted, the valuation increase will more than make up for it, and your stake can easily be worth millions.

3. This is only the case if the company is actually successful. Keep in mind that only 10% of startups manage to succeed, and that’s a generous estimate. Investors know this and they play the numbers. Because you will be investing your time and career in just this one company, you need to really ask yourself- do you believe in this company, its mission, and most importantly- the founders, to turn this into a successful company.

4. All in all, 2% for an engineer at an early stage startup is quite generous. Along with the salary which is not bad either, given the salaries are typically lower at such an early stage, and especially if there is a lot of equity involved.

5. This package is not really comparable to FAANG. You don’t join a startup for the money, you join it because it offers you things a cushy FAANG job doesnt- it gives you a chance to make a real impact, be heard, grow and challenge yourself in ways you simply cant at a corporate job. Its not for everyone, but it sure its exciting.

Equity is worthless until proven otherwise. Full stop. You’re being offered $152k and a lottery ticket, which depending on your experience, location, and role, is IMO still pretty generous. Big tech companies also don’t hire just anyone, especially not right now.

I think it’s an perfect deal. Beyond the money, which is a great offer, you gonna learn much more deeper in a startup than in a traditional one. Take it.

My thinking is that 2% of $3M is about $60k,

I’ve got some good news for you mate. The company is valued at a fair bit more than $3m, that’s just how much someone invested in the company recently. Likely that $3m bought someone 10-20% of the company, so your 2% could be worth $300-$600K

Your compensation is not $200k it’s $152k + any other non equity benefits. Decide if you want to ride the startup train, stick in your current situation or wait for big tech company to come your way. Nothing we say here can swing it for you. Equity at this stage is like a lottery.

Bro. I work for FAANG. Take this job. You can come do big tech after you’ve made a shit ton. I’d leave my company right now for an offer like this lmfao

Aside from the money equation. Where will you have more autonomy, opportunity and growth personally and professionally. At a large establishes firm or a startup.

A large platform provides security, with comforts and a solid network. But a startup will make you 10x who you are. Pick which aligns with your future ambitions.

What happens to your equity if there is dilution in the future?

Equity is good but they have to go public for it to mean anything.

Best of both worlds in my book. Great work!

It’s reasonable because it could grow overtime.I think it’s a good start go for it.

What you’re missing is the possibility your 2% equity could be worthless in 4 years (or less).

Startups are high risk so plan accordingly.