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It's hard to say without knowing more. Here are a few questions that come to mind: - What stage is the company? Earlier employees will be diluted more, which is one reason for getting a bigger slice of equity. 0.2% is low if they haven't raised any money. - If the company has raised, how? A lot of people don't appreciate that if a seed-stage company uses a YC SAFE and hasn't done a priced round yet, as an early emplo…
https://www.indexventures.com/rewardingtalent/calculating-in... has some benchmarks (take with a grain of salt)
Hope it's helpful!
It is also generally good to know if the company is already profitable (I'd guess if it's early startup it's not profitable), what is the runaway if, say, today they lose all customers and have to pivot, how much they earned in the last few months on month-to-month chart, how many paying customers they have.
And also remember that 4 years is a lot of time, your friend may not want to stay for such a long time so it would be good if these shares vest in portions every year. Otherwise once your friend gets closer to 4 years mark there might be a surprise waiting for him if founders decide 0.2% is too much.
You don't (or shouldn't) join an early stage startup with the expectation that you'll get rich by any measure from the equity. You join an early stage startup because you likely want to eventually found your own startup in which you'll own > 50% of it. That's your shot at getting rich. The experience as an early stage employee just exposes you to the chaos and ups and downs of it all, and if it goes well then yeah ma…
Since when do founders make 50% equity? Two co-founders, that's 100% already with no room left over for VC investors.
If there are two founders and there are already a few SW engineers this seems reasonable. If they're the first technical employee who isn't a founder it seems pretty low.
Couple of factors I'd consider (and despite that still made mistakes):
Assumptions:
* This is in bay area.
* You have 5-10 years of experience
* You have a competing FAANG offers or can get one with 2-3 months of leetcode grinding
Option A - FAANG job
* Assume TC of 300k a year (conservatively). Includes base, bonus and real equity.
Option B - The startup:
* Pays say 200k in base salary
* assume aggressive valuation of 50M making .2% = 100k over four years
Say your exit is in a 8 year time frame. (Startups going from 10 employees to an exit faster than 8 years is very unlikely??).
Option A (assume no pay increase) over 8 years:
2.4M
Option B with a 100x growth in 8 years:
200 x 8 + 100k x 100 = 1.6 + 10M = 11.6M
Now do you believe their "story" on why they think they are gonna grow 100x in 8 years (without you incurring dilution etc)?
Do you believe you can get to 500k "real" tc at another FAANG in 3 years (say by moving around)?
Which scenario seems more likely and safer?
If you dont think 100x is possible and 50x is more realistic and you still need get your 11.6M to make it worthwhile (not making much real moolah for 10 years) then perhaps 0.4% would break even?
Now there are plenty of unicorns which would do >>>> than 100x. If only I could pick them before the fact!