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?

  • Aggressive_Ad_5454@alien.topBEnglish
    1·
    10 months ago

    I went through this a while ago and it was berry berry good to me. Others have talked about stuff like 83(b) elections, vesting schedules, and the like, and you need to understand all that stuff. If the founders don’t know about it you’d be wise to hire a lawyer who know about startup stuff to read over your paper work and advise you.

    Here are some important biz questions.

    ** Who is working on the “Product-market fit.” That’s a fancy way of asking “will anybody spend their hard earned money on what we hope to sell, and when will we know that?”

    ** How long until we need more financing, and what do we have to do to convince investors to kick in more money?

    ** Good startups make sure everybody has the same incentives. Do the founders have the same deal in terms of vesting schedules and share pricing as you do? At this stage they should show you the capitalization table (list of shareholders) or have a really good reason not to.

    Here are the significant questions for you personally. Is this business idea and prospective company worth ten years of your life? Do you think it will fly? Do you want to spend the next decade with these people?

    A piece of hard-won advice. If you take this on, avoid doing multiplications in your head. Don’t waste your time thinking, “I have 100,000 shares, and if they are worth $50 I’ll have five mill.” Your shares aren’t worth the laser printer paper they’re printed on until the business is up and running on revenue from customers. (WeWork and other never profitable unicorns are so 2019.)