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Ask HN: How much equity should I ask for?

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Ask HN: How much equity should I ask for?

#1

Post by 0xfd441b8e »

Hi all,

So I have recently set up a meeting with our company's cofounders regarding my equity stake in this startup I work for.

I am one of two developers (not including the cofounder). I am making between 40-45k per year and currently have a number of options vesting which would represent ~0.2% of the company currently (I have no idea what they would represent in 3 years when they finish vesting). We are currently raising our second seed round. I have been with the company for 10 months.

I believe I deserve more equity for the risk I am taking on, as well as the salary I am giving up to work at this company. I did a lot of research and I know my options would be basically worth nothing if we ever get acquired (which is the two cofounder's end goal for the company). I also don't have any expectation of a cash raise anytime soon. Any advice would be helpful. Specifically how much percentage points I should ask to have my stock options increased by?

Thank you.

Re: Ask HN: How much equity should I ask for?

#3

Post by mtmail »

You probably can't ask for an increase of options in the existing grant (contract), only for a new grant. And since there's two developers you're effectively negotiating for the other person as well (even if you don't want to, the founder will claim employees should/will be treated equally).

Of course you personally can make money during an acquisition. If it's a cash acquisition there's now a buyer for your options, if it's a stock acquisition you'd now own stock in the new company (if you're lucky they're publicly traded so you have a market to sell your options to).

Is 0.2% the options you will have after the first year (with 3x0.2% more coming in the next years) or is 0.2% the total already?

How much salary would you say you're missing by working at that startup?

Re: Ask HN: How much equity should I ask for?

#6

Post by 0xfd441b8e »

mtmail wrote: post #3

You probably can't ask for an increase of options in the existing grant (contract), only for a new grant. And since there's two developers you're effectively negotiating for the other person as well (even if you don't want to, the founder will claim employees should/will be treated equally). Of course you personally can make money during an acquisition. If it's a cash acquisition there's now a buyer for your options,…

So the first developer was there for a little over a year before I was. And worked for free for a little bit of that. I'm assuming that developer has a solid amount of options. If anything the cofounders just gave that developer stock outright.

0.2% is the total. I have approximately a third of that 0.2% right now.

I would consider I am missing out on about double my current salary. Not to boast but I could definitely reach ~80k no problem.

Re: Ask HN: How much equity should I ask for?

#8

Post by Xyik »

You should definitely negotiate and consider your strike price as well. For Engineer #2 you should probably be getting at least 0.5%, especially if you have proven yourself. Make the argument that if the company were to exit for 10M in a couple years you would only net ~20K for about 3 years of work, which is less than a regular salary else where.

But why do you think your options would be worth nothing? That in itself is a problem.

Re: Ask HN: How much equity should I ask for?

#10

Post by 0xfd441b8e »

Xyik wrote: post #8

You should definitely negotiate and consider your strike price as well. For Engineer #2 you should probably be getting at least 0.5%, especially if you have proven yourself. Make the argument that if the company were to exit for 10M in a couple years you would only net ~20K for about 3 years of work, which is less than a regular salary else where. But why do you think your options would be worth nothing? That in itse…

We are going to need to raise a lot of money; we are developing our own hardware. I don't want to mention more than that because this is a high visibility story now and members of the company frequent HN.
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