Ask HN: How much equity should I ask for?

I dropped out of University after first year and took pretty much the first job I liked the sound of that would pay me to code. It's been a great year and I wouldn't trade it for the world. I was the first technical hire at the company working with an external agency. Fast forward 10-12 months, I'm now an experienced Junior Dev. I'm currently working for £18k p/a. I've been interviewing at a couple of other companies and have had been quoted £26-32k and with a hard offer of £28k.

We're about to go for a funding round with a valuation of ~£7m. My bosses have informally agreed to better the £28k offer. I really like the idea of a minor equity stake. I was thinking somewhere between 0.125% and 1%. This feels like a big range. I don't want to come off like I don't understand the value of the potential equity stake.

After the funding i'll (hypothetically anyways) be working under an experienced CTO (new hire) with a quite substantial amount of responsibility.

I really appreciate any advice HN :)

http://corcodilos.com/blog/7874/should-i-take-a-big-counter-...

The job offers you got suggest that your current employer has been happily underpaying you by 50% of your market value.

Also, you're comparing a "hard offer of £28k" with "informally agreed to better the £28k offer". Don't turn down the hard offer until you've gotten a real commitment. And you'd need to get that commitment before the £28k offer expires.

Your leverage at the moment is, if you decided to get another job, you would walk away taking all knowledge of the current system with you. Imagine you quit, and something went wrong the next day - how long would it take them to fix it?

I think your boss did you a huge favor, taking a risk on you this first year. Now you are no longer an unproved dropout, he owes you a real wage. Keep both of those in mind.

Corp (in 1 week): "Thank you, but we cannot entertain your offer. We wish you all the best in your future endeavors".

You: Ok, let's negotiate.

Corp: "We've just filled in the position with suitable candidate. We'll keep your resume in our database for 6 months in case we might get openings down the road."

You make X dollars in salary every year. You model the equity as a lump-sum bonus paid after 4 years (divide the liquid value of the options by 4, mentally applying as a deferred bonus for each vesting year).

To make that happen, you ask management for some outcome scenarios --- a "low", "medium", and "high" outcome, for instance --- that values the grant you're getting.

ie: "If we're acquired for $50MM, your options would be worth $Y". You make $X/yr, so, if the company is acquired, you'd effectively have made $X+($Y/4)/yr. Are you happy with that number? Then agree.

To dig into the low/med/high scenario, two helpful anchor numbers: first, the company's valuation at its last round (if the medium option 20x's valuation, that's, you know, worth knowing), and second (and I think more important) the multiple of trailing revenue that represents. In other words: in the "medium" outcome, how much revenue do your employers propose the company to have done in the preceding year, and what multiple does that imply for the valuation?

These are easy numbers to get your head around, implicitly capture the percentage of the company you're getting without making that the terrain you're negotiating over, and (most importantly) forces your employer to be clear about where the numbers are coming from and how the business will actually work.

The other way to do this is just to value equity at $0.