Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: How much equity to accept as the sole tech co-founder in this case?

news.ycombinator.com

Post reply on HN
Print view View original

1–10 of 13 posts

Ask HN: How much equity to accept as the sole tech co-founder in this case?

#1

Post by buzzthro »

This is for a tech company that has a CEO and a CPO without a prototype, customers or any other full-time hires. They are about to close on their seed funding though and I'll be joining after right after that. The equity will be from the founders pool and the salary is somewhat negotiable between 100k-200k per year before taxes. In terms of the other founders, one of them has a gotten their startup acquired before for 10s of millions (I think - undisclosed figure but I put that number together from the parent company's total funding) and the other founder has no prior startup experience. One of them has some limited tech experience.

What would you accept in this case as the CTO?

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#3

Post by daanlo »

I have a bit of a radical view on this: In order to be successful you have 10 years full of work ahead of you. In comparison, whatever is there today is nothing. If you are co-founders, then it should be 1/3 each and each with the same salary. At least this should be the default. You may have different needs, experience and skill sets and can of course speak about these openly, but 1/3 each should be the default imho.

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#4

Post by zinxq »

daanlo wrote: post #3

I have a bit of a radical view on this: In order to be successful you have 10 years full of work ahead of you. In comparison, whatever is there today is nothing. If you are co-founders, then it should be 1/3 each and each with the same salary. At least this should be the default. You may have different needs, experience and skill sets and can of course speak about these openly, but 1/3 each should be the default imho…

This is the right answer.

The biggest thing they're bringing to the table is the (supposed and impending) funding. The idea itself is nearly worthless until executed.

Good Tech Founders ARE the hardest founding team members to find.

If you accept notably less, you're always a lesser member of the team. The best founding team keeps equity and salary equal. That's the least chance for friction and resentment.

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#5

Post by PragmaticPulp »

> They are about to close on their seed funding though and I'll be joining after right after that.

Hold on - They are raising funding right now, but planning on bringing you in after fundraising?

If you're truly a co-founder, why aren't they bringing you in now? I'd be concerned that they're using you to secure fundraising, but they're getting the best of both worlds by waiting until after funding to give you less equity than a co-founder.

Be wary of accepting a "co-founder" position where you're being treated more as an employee. They seem to be working to cement their status as the actual founders and add you on later with an arbitrary title.

Do you know how much equity they have? How big is this "founders pool" of equity?

Frankly, between the significant salary and the fact that you're being excluded from the founder's list before seed funding, I think it's more accurate to view this position as a regular post-funding early hire. I think 5% equity is not uncommon in these positions, give or take, though you could be able to negotiate more if they're really interested in bringing you on as an actual co-founder.

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#6

Post by sergiotapia »

arrakis2021 wrote: post #2

Post funding, pre product, pre revenue, Salary CTO, with experienced Founders? 5% would be good, 10% would be better

5% is a good number I've seen a few times in the same circumstances. If this were pre-funding you should be asking for a solid third of all equity since you are a cofounder.

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#7

Post by mintone »

daanlo wrote: post #3

I have a bit of a radical view on this: In order to be successful you have 10 years full of work ahead of you. In comparison, whatever is there today is nothing. If you are co-founders, then it should be 1/3 each and each with the same salary. At least this should be the default. You may have different needs, experience and skill sets and can of course speak about these openly, but 1/3 each should be the default imho…

I wouldn’t say this is radical, I think PG wrote an essay years ago with this as the core thesis!

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#8

Post by stazz1 »

daanlo wrote: post #3

I have a bit of a radical view on this: In order to be successful you have 10 years full of work ahead of you. In comparison, whatever is there today is nothing. If you are co-founders, then it should be 1/3 each and each with the same salary. At least this should be the default. You may have different needs, experience and skill sets and can of course speak about these openly, but 1/3 each should be the default imho…

+1 for shining light on the decade necessary for success

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#9

Post by edmundsauto »

Are they asking you to choose between salary and equity?

I wouldn't consider myself a co-founder with < 5% equity, and I wouldn't join a team like this unless my cash comp were 75% of my market rate. If you feel super strongly about the TAM and product idea, or need less cash - take a risk! But, for me (at FAANG comp), I would need something like $175-200k + 10-20%.

Re: Ask HN: How much equity to accept as the sole tech co-founder in this case?

#10

Post by edmundsauto »

arrakis2021 wrote: post #2

Post funding, pre product, pre revenue, Salary CTO, with experienced Founders? 5% would be good, 10% would be better

For me, 5% sounds more like a the offers I've gotten as first Eng hire, rather than co-founder. A couple months ago, "cofounder" should have gotten this person around 1/3. Now, I think it's reasonable to look around half that - 10-20%, depending on cash comp versus market.
Post reply on HN