The company recently got $3M investment. I’m being offered $152k salary and 2% equity, vested over 4 years. Is this good?
My thinking is that 2% of $3M is about $60k, so I could treat that as an extra $15k per year. But if I look at the valuation based on that investment, it is probably worth 5x that, like an extra $75k per year. All in all it is over $200k compensation, which I’m grateful for, but it’s on par with a tech job at a big tech company. Are these reasonable assumptions, or am I missing something?
I figure that equity will be mostly diluted at the next funding round. Each new round of investors will attempt to buy a controlling share.
If prospects look good, they will inject at least enough to double capitalization, diluting current ownership shares and pecentage by half or more. Even if the total value increases, your shares may not because there are more shares.
Get an option to purchase or reinvest matching funds to maintain your equity share. If others are investing, it’s worth investing. Double-digit profits and growth can more than offset any loans taken to buy stock to maintain your ownership percentage.
It will only kick in when they issue additional shares, and your equity share could be diluted.
If you own 2% you own 2%. If they give out more shares you would get some of them so you are still at 2%.