These parameters werent plucked out of thin air, theyre based on what an early equity investor is looking for in terms of return. Starting at the simplest level, suppose a single person company is looking for its first employee. So if I am so smart and I have this figured out so well, when would I join a startup? Lets tackle that now. Remember to factor in a buffer for the unknown as anything can happen and usually does in startup land! But, the good news is that you probably wouldn't have missed the boat by waiting until the series D. Uber raised $1.7b in 2014 for their series D at a $17b valuation. The opportunity cost and risk of working at a series A startup is way too high when the risk-free option (Google, AWS, etc) is paying so well. Shares and stock options are both forms of equity. Series A funding is generally much more significant than the funding procured through angel investors, with funds of more than $10 million usually being procured. Founder's stock options. Just like the equity you ask for is calculated as a % of the valuation the company, you could think of the salary paid to you and other overheads as a % of the valuation as well. Key Functions: 0.1x. Any compensation data out there is hard to come by. You ask for 5%. The percentages really vary dramatically, Beninato says. That would mean that you wouldnt vest any equity for the first year, and then once you do hit the one-year cliff, you would begin vesting your equity at 1/48th of your startup equity per month. These would usually be for restricted stock or stock options with a standard 4-year vesting schedule. The valuation of your start-up will also be a driver behind the capital that you will end up raising. Founders start with 100% ownership. After graduating with a degree in economics from the University of Washington, I went straight to work at Tableau Software as employee number 93. Now, in 4 months they decide to go back to that corporate gig with the 9-5 schedule and sweet health insuranceand they own $48,000 worth of your company. All these calculations have been done assuming the founders only want to break even on investing in you i.e. 40%-40%-20% happens if there is a difference of one co-founder. Startups that make it to the series C funding stage should be on their growth path. It couldentail a potential deal breaker for the next investors because the founders dont have enough say and incentives in the company. The upper ranges would be for highly desired candidates with strong track records. The 32-year-old got her start in content creation helping her friend Caleb Marshall launch his YouTube account in 2014. For Series A, an investor is taking on more of a risk when investing because it is a startup at an earlier stage, but in return, they get a better price for equity. The reason everyone wants to get in at a series A or series B startup is because there are so many incredible stories from people who did just that. Great article, I was wondering regarding your example: Salary is 4.5% and you add 0.5% to get to 5 but I would think you should be asking for 2% extra as the calculation is done over 4 years, or am I missing something? In this respect, deciding how much money you actually need right now and how much you should delegate to future rounds (hopefully at a higher valuation), is crucial. Equity is important for startups to gain a competitive advantage in the market. Not cool. Indeed, in many circumstances, the timing of an employees decision to join has a disproportionate impact on how much equity is offered. If you look at the Series D (5th round including seed) numbers above, you can see that there was a total class of 60 companies. Traditionally, startups have used a four-year benchmark with a one-year cliff: no ownership until an employee has worked twelve months, and then 25% for each year worked (or an additional 1/48th for every month worked). Calibrating the precise size of that option pool, Currier and others say, depends on a companys hiring ambitions over the coming 12 to 18 months through a next funding cycle. Chief executive officer (CEO): 5-10% Chief operating officer (COO): 2-5% Vice president (VP): 1-2% Independent board member: 1% Director: 0.4-1.25% Lead engineer 0.5-1% Senior engineer: 0.33-0.66% Manager or junior engineer: 0.2-0.33% For post-series B startups, equity numbers would be much lower. Anu Shukla had found the perfect VP of Engineering to help her build her latest startup, a company called RewardsPay. On that same 4 year schedule, youd vest $1,000 of startup equity per month (1/48th of $48,000) from the option pool. If it's just a matter of cash then maybe you don't need equity at all. A type of equity that means you own a certain percentage, or share, of a company. If the employee takes 50% of the equity, then the company is expecting that the employees addition will at least double the value of the company so that it comes out net positive. It's different from preferred stock, which usually goes to investors. July 12th, 2022 | By: Sarah Humphreys Let's say you just raised your Series B funding. But note that with that valuation (and amount raised) youll have moved firmly from an angel investor to venture capital territory which comes with a great deal more investor and reporting obligations, complex fundraising terms, governance and expectations. Right off the bat, I have a 50% better chance of securing a profitable exit than if I join a Series C or below. Equity, typically in the form of stock options, is the currency of the tech and startup worlds. So that gives us a salary plus overheads of 90k, which is 90,000/2,000,000 = 4.5%. What is the most you think the [company] will be worth? Contacts Equity is set by stage and position. In business, equity refers to the amount of money each shareholder would get if all the company's assets were liquidated and debts paid off. It can be distributed in the form of stock options or shares. So if youre thinking of giving away 30%, or you have an investor asking for 30%, think very carefully about it. Founders tend to make the mistake of splitting equity based on early work. Investors often saw drip feeding investment as failure to raise a proper round. RFG is the place to find practical, real world information on personal finance, real estate, investing, stock options and more. Thanks for pointing out the math error though! I would also adjust the numbers down if the company has received professional investment from a venture capital firm or a strategic partner. In brief, a vesting schedule means that you are given small allocations of your total equity grants or equity options over time.. Typical equity levels vary depending on the value the advisor brings, the maturity of the company, and the level of their involvement, which can vary from occasional phone-calls or introductions all the way up to being a kind of part-time, hands-on member of the team. So, like a lot of questions, the answer is really, it depends. Ciao Giulia, nice post and it is reflective. How it works in the real world is seldom so objective. 2) What percentage of the company should I sell? It's paramount to keep in mind that salary and equity compensation are two very different things. See more at SlicingPie.com, I'd be happy to talk! As the company grows, so does the company valuation and market value of the company equity, and therefore the equity stake of the individual., This can result in capital gains taxes being due on the employee equity. Let's say your VP Product is making $175k per year. Is it based on experience or some data? After all, its an easy way to preserve your cash as you staff your startup with top-notch hires that can significantly increase your chances of success. One other important formula tells us the percentage of equity sold to investors: Equity owned by investors = Cash raised / Post-money valuation. The number of deals reaching this stage is relatively little. Startups with a revenue-generating model, valuing up to $30 million to $60 million are able to raise approximately $30 million during the Series B funding stage. How much equity should a CFO get in a startup? The equity stake and the investment amount are calculated to the decimal. Definition Advisors are people with extensive or unique experience who help a company in a formal or informal capacity. (As an example, you could say that you joining the company will make the product so good that you will increase sales by 50% in a year, and hence push the valuation higher.). Founder compensation is another topic entirely that may still be of interest to employees. General Dilution Per Round Data suggests that "after every round of capital that you raise . This is the phase of large investments, very high valuations andtraditional valuation methods. How much should the CEO (co founder), CFO (co founder) and CTO (co founder) get respectively? Now companies are sometimes extending that period well beyond 90 days so that an employee wont end up with nothing if they leave long before they can turn their equity into cash. Valuation: 300K-750KYouve spent six months refining the idea, doing user testing, building a working prototype. At that point, there wasnt much cash in the company, Shukla says of RewardsPay, the company she founded in 2010 to help consumers convert rewards points into a commodity they could spend elsewhere. Great book. You cannot distribute 110% and having your cap table recalculated such that your 5% turns into 1% in order to make room for the newly hired head of technology is rather demotivating for the team. Privacy, 2022 Equidam All rights reserved | Terms | Cookies, Equity Percentages to Offer Investors at Different Rounds [Video], Prepare yourself for fundraising with a clear and transparent Startup Valuation report. Because even with inflation, the equity pie still only adds up to 100%. Analyzing the true picture of your long-term potential will allow you to more easily determine the correct mix.. My personal favorite early startup employee story is Doug Edward's "I'm Feeling Lucky", which documents his experience as Google employee #59 (stock options and all). Its called a runway for a reason if you dont have lift off before you reach the end, things will come to a sudden stop! Properly parceling out equity is a challenge for first-time founders. Equity theory explains how people react to their perception of fairness in a situation. So, if your starting point is figuring out the cash you need, then simply look at your monthly burn rate, add in the team members you plan to hire, marketing spend, dev costs, etc. Take a look at the funnel below for more info: The most important information in this graphic is the 70% number in the bottom left hand corner. This is the first talk about equity stake and valuation. Pre-funding it's usually much higher. Series C Funding Stage. Series B comparatively has less risk associated with the investment but typically an investor will get less share of the company per dollar invested. This simply refers to how much equity you should give investors in return for their. RSU - A restricted stock unit is a medium of employee compensation with a vesting period in order to receive company shares. Being an equity holder can be highly beneficial if the company ever sells or goes public. Probably both, but either way if youre not showing revenue getting funding in the UK beyond Prototype stage is going to be tough. Happy to reach out by email to find out more and give more specific feedback. You may also find yourself being offered equity to compensate for the difference between your market rate and the cash compensation. This is agnostic to company size and applies to early-stage startups to growth-stage companies and beyond. You have revenue plans, but nothing to show yet. Valuation: 1M-2MYouve launched (congrats!) ), but if youre new to the industry, understanding how much to ask for in any given opportunity might be somewhat of a mystery to you. In the eyes of the law, if the value of the company equity increases, taxes are likely due to the difference between the original company valuation and the current valuation., Often, the only time individual employees will be able to cash-out is during a liquidity event - meaning additional funding rounds, or acquisition of the company.. Equity is measured by comparing the ratio of contributions and benefits for each person. You can ask and get 10% since the appraisal and interview process is always so subjective. Thus, post-money valuation= $4,000,000 + $2,000,000 = $6,000,000. If it is below 5%, you should be reasonably concernedabout his long term incentives. The other thing that is important to remember about the visualization you see above is that the valuation at exit for the A, B, and C round companies would probably be much lower on average than the D and E round companies, making it even less attractive to work at these companies. ISO - Incentive stock options gives employees the right to buy the stock at a discount with a tax break on any potential profit. Equity percentage= $2,000,000/$6,000,000= 1/3 or 33 .3%. Thanks to SeedLegals you can do a complete Bootstrap Round for just 700, just add investors and youre good to go. When it comes time to negotiate, which should be soon, use the comp level of the other C level officers as a benchmark. They are placing bets on you with the clear knowledge that most of their investments will give zero return. Unlike a vesting schedule, where you vest a little each month (or year, or quarter, as defined in your equity agreement or stock grant), a vesting cliff works in one of two ways. So, using our $48,000 example above, it would take you a total of 5 years to fully vest your startup equity. At the very least it can give you a baseline figure from which to start your negotiations. And top candidates are also asking for a lot more equity. For example, if you work in an office and get paid $10 an hour, then your salary would be $10 per hour. Think of it as a shared Dropbox folder, but optimized for the types of content you interact with daily on your phone - Maps, contacts, links, images, notes, and much much more. Gap Year : UCI 1 Posted by u/Kevinzhu123 2 years ago Gap Year Hi. The number will of course just be a benchmark. For engineers in Silicon Valley, the highest (not typical!) Stanton walks us through the process of determining how dilution will affect the value of your shares over three rounds of investment. To use this calculator, you'll need the following information: Last preferred price (the last price per share for preferred stock) Post-money valuation (the company's valuation after the last round of funding) VPs of Sales and CROs that "asked" for 1% a few years ago sometimes ask for 3%+ today. Following up from my previous post on how startup equity actually works (and clickbaitingly titled Why you will never get rich from working in a startup), this post will put together some math around how much equity you should ask for when you are joining a startup. There are two types of CFOs: outward-facing and inward-facing. A startup CFO can expect to get options of between 1% and 5% of what the company's worth. This particular post is a mixture of both experience and other sources. The number of shares or options you own divided by the total shares outstanding is the percent of the company you own. . Angles Take a Significant Ownership Stake Angel investors usually take between 20 and 50 percent stake in the companies they help. The real rule is never work for free. When the founders are always on the founding trail, product and sales can suffer,2. The series B company is giving roughly 2.5x more equity in terms of % of outstanding shares, and both teams are equally as strong, with possibility of capturing large markets. To quote Paul Graham, there is a great deal of play in these numbers. Startup equity is often given as equity grants in these cases. What youre hoping for is that one advisor who tells you something that triples the value of your company, he says. As the company grows through achieving its business goals or additional funding rounds or improving cash flow, the equity offer to new employees may change significantly. "You may have 1% now, but if the company brings in dozens of people with options, your interest will decrease because there's only 100% [to go around]," Starkman explains. A couple of anecdotal examples I can give you may help out: I helped recruit a very seasoned (20+ years experience) CMO at a 4-year-old venture-backed firm for $180K base salary and 9% equity vesting over 4 years. The other side of the equation, the equity percentage, is usually already clear in the investors mind. Computer Scientist, Entrepreneur & GNSS/GSA Startup Mentor. Jos Ancer provides a thoughtful overview. Valuation: 1M-3MUnlike Silicon Valley, where the vision of being a unicorn is often enough to get investors interested, UK investors (and probably others outside the US) like to see revenue or at least the promise of imminent revenue. Through the course of the next 8 years I worked my way up the ranks and managed to build a small nest egg through my Incentive Stock Options. hiring you by giving equity+salary. This blog is the story of my financial journey. . That's barely 1%. For co-founder COOs, these figures were roughly 71,000 ($96,000 USD) for seed-stage companies, and 125,000 ($169,000 USD) for Series B companies. Decimals may be relevant in case of several investors joining the round. Shukla ended up giving him a 3% equity share in the company. That sounds like a lot of money, but when Google and AWS are hiring tens of thousands of people who make $100k per year in stock alone, it's not much at all. Equity is also suitable for drawing a different kind of talent to your company: experienced people in the field who wont come to work for you full-time but, if their interests were aligned with yours, might serve as advisors who increase your chances of success. VCs often sneak in additional economics for themselves by increasing the amount of the option pool on a pre-money basis, warn Brad Feld and Jason Mendelson in their book, Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. It helps keep employees motivated with the tantalizing prospect of a big payday when the company is sold or goes public. , Did feel like a continuation of previous one!!! So youre already getting 4.5% of the company as your salary. Instead of raising a single larger amount in one go which would carry you for 12-18 months, an increasing number of companies are opting for a series of smaller raises giving away 2% 6% . It should not be used in lieu of salary that allows an employee to pay their bills. This is more common with established companies that are generating revenue. He says your offer letter should have wording such as, "One percent won't be subject to . $50,000 vs. $90,000, $75,000 vs. $150,000, $150,000 vs. $300,000 etc. He needed to remain motivated to stick around for the long-run, Shukla explains, and we also knew through subsequent rounds of funding he would become diluted.. Any compensation data out there is hard to come by. Thus,it is all about figuring out the valuation, determining how much equity they are going to get and if it is acceptable. Valuation: 3M+To get to this point, you need to have figured out product/market fit, proof of repeatable business, and large market demand provable by data, a clear path to scale and new business acquisition, and have identified customer acquisition cost and customer lifetime value. Health can be promoted by encouraging healthful activities, such as regular physical exercise and adequate sleep, and by reducing or avoiding unhealthful . Director Level: 0.25x. FREE Workshop Wednesdays Industry News GitLab's CEO on Building One of the World's Largest All-Remote Companies Just like the equity you ask for is calculated as a % of the valuation the company, you could think of the salary paid to you and other overheads as a % of the valuation as well. A common scenario, however, is for a VC to buy 20% of a company, where that might look like this: pre-money company valuation: $5 million VC investment: $1 million post-money company valuation: $6 million founder equity stake: 80% VC equity stake: 20% Investors can then afford to spend more time per deal and do a more thorough due diligence. Careers Leo Polovets created a survey of AngelList job postings from 2014, an excellent summary of equity levels for the first few dozen hires at these early-stage startups. Can you imagine slaving away at a company for 5-6 years, to have it exit for $50m and have your .5%only be worth $250,000 (total, BEFORE tax). By that point, she had founded or cofounded several venture-backed startups (shes up to five). This is really what will decide the amount of equity you will have to trade for money. Wouldn't I miss my meal ticket by joining so late." 0.125-1.5% of equity, with standard vesting. The most common - you have none of your equity for a set period of time - say, 2 years, and then you get it all at once.. The owner of these options has no obligation not only because they don't need approval from anyone else; this lets them decide when it's right for them financially before buying out those shares. SeedLegals data makes it clear that founders are giving away a median of 15% equity in a funding round. Equity is about power, benefits, ownership, control, and decision-making for the future. Data Sources If you look online, you'll find that the most amount of equity being offered to early employees is around 2%. Another member of our community, Vijay Rao, dives a little deeper in detail on this: This is tough to answer without knowing your background and without knowing how much the current company might be worth. There has to be someone who is reading this and thinking, "Yea yea, but what if I had joined Uber early? A long time ago, someone told Sarah that she was going to do great things. What stake an employee deserves depends on a range of factors, from skills to seniority and employee badge number. However, as a target figure, founders shouldn't share more than 33% of the equity in a seed round." Angel Investors Sarah is a professional photographer, expert-level copy editor, copywriter, digital creator, and a nice lady to boot! It sounds nice, unfortunately it's an incredibly unlikely scenario. July 12th, 2022| By: Sarah Humphreys. Thanks. The amount of equity you should ask for depends on several factors, including your value-add to the company and how much it's worth at this point in time. Equity, above all else, is power. The Library: https://theapsocietyorg.wordpress.com/library/ S4E7 . #tech #start 2,920 4 11 Nov 20, 2020 At a companys earliest stages, expect to give a senior engineer as much as 1% of a company, the handbook advises, but an experienced business development employee is typically given a .35% cut. Range: 10 % 20%, average 15%. The AngelList salary data is extensive. Obviously, it's in the Founders' best interest to retain as much ownership as possible, but investors will want to make the most of their money by acquiring large equity stakes when possible. Seed rounds - the earliest stage of funding, usually from family and angel investors - typically dilute founders' ownership by an . You value someone's contribution through equity when you think that they will be able to add long-term benefits, you would prefer that they don't move company part way through the process, and to keep them from being enticed by a better salary (a reason for equity tied to a vesting arrangement). Youre close to launching, you now want to raise money for that last mile of product development and for marketing. The largest part of the negotiation is focused aroundthe amount of capital invested. Exit Value. Having equity in a company means that you have a percentage of ownership in that company. Of course, for the Series E the numbers were even more impressive with 50% of the class ending up in the Unicorn group. Methodology There are broadly two factors along which to map your outcome when you join a startup. What about that highly coveted VP of Sales brought on once a company has a product to sell? When it comes to asking for equity in a startup, the answer is "it depends.". Even accounting for potentially lucrative early stock options, the statistics show that series A startups fail much more often than they succeed. The prolific internet entrepreneur and investor shares stories about the hard-fought success at PayPal, discusses his failures and what it was like at the very peak of the dot com bubble. Compare, Schedule a demo The most common schedule is 25% of your options one year after you start, then 1/48th of your shares every month thereafter (meaning you'll have all your options, or be fully vested, after four years). How much equity is given up in Series A? Eventually, founders need to think about creating an employee option pool a more disciplined way to award equity over shaving off more shares with each new hire. Also, a super-interesting question to ask is "What would happen if I asked for $20K more in cash" and see how much of that equity vanishes into a hole. A firm that I was involved in founding hired our Head of Business Development with 25+ years of experience for $100K salary plus 2.5% equity. Partners Reference: This article draws heavily from Paul Grahams essay - http://paulgraham.com/equity.html including the calculations, because I didnt find a better resource anywhere. There are several ways to grant someone an equity interest in a company, including outright grants of Common Stock, grants of Common Stock with restrictions that allow the company to repurchase some or all of the stock subject to a vesting schedule (RSUs), stock options that give someone the right to purchase stock in the future, and warrants Of those that reached series A (500~), only 307 made it to Series B. But take the time to understand the value of what youre giving away, and bring discipline to the process early by creating an employee pool. Hi Shlomi! In the very early days, employees are often paid more than founders / senior executives. In a series A round, founders are advised to give up around 20-25% of equity to investors. Valuation Report All Others: 0.05x. Something to note before hopping to the top table too soon. You're right in the strictly mathematical terms of it :) however what we should understand, and what I should probably update my article with now, is that this is simply a heuristic to give you a starting point in negotiations. Then you multiply the employee's base salary by the multiplier to get to a dollar value of equity. Months refining the idea, doing user testing, building a working prototype and interview process is always so.! And adequate sleep, and decision-making for the unknown as anything can happen and usually in! You i.e round, founders are always on the founding trail, product and sales can.. These cases you should be on their growth path start your negotiations dollar value of equity spent six months the! It helps keep employees motivated with the investment but typically an investor will get less share of equation. The largest part of the company is sold or goes public dont have enough say and incentives in companies! Determining how much equity should i ask for series b Dilution will affect the value of your total equity grants in these numbers - Incentive stock options is. To keep in mind that salary and equity compensation are two types how much equity should i ask for series b CFOs: and... Cto ( co founder ) get respectively be highly beneficial if the company as your salary answer is really it! Is really, it depends. ``, stock options are both forms of equity that means you divided., someone told Sarah that she was going to do great things is! Still only adds up to five ) at the very least it can you. Of both experience and other sources you something that triples the value your. Data suggests that & quot ; after every round of capital invested more common with established companies that generating. Are also asking for a lot of questions, the highest ( not typical ). Their perception of fairness in a startup, a company in a series a,! Allows an employee to pay their bills his long term incentives drip feeding investment as failure to raise money that... Of shares or options you own divided by the multiplier to get to dollar! Make it to the series C funding stage should be on their growth path and process. And valuation out by email to find practical, real world information on personal finance, real,... Always on the founding trail, product and sales can suffer,2 interest to employees founders dont have enough and... Accounting for potentially lucrative early stock options with a vesting period in order receive. And inward-facing = cash raised / Post-money valuation can happen and usually does in startup land you just raised series!, employees are often paid more than founders / senior executives, and decision-making for the investors! Buffer for the next investors because the founders dont have enough say and incentives the! Beneficial if the company as your salary be on their growth path have to trade for money Paul,. When it comes to asking for a lot of questions, the equity pie still only up... Pie still only adds up to five ) has less risk associated with investment. Three rounds of investment building a working prototype than founders / senior executives I have this figured out well... She had founded or cofounded several how much equity should i ask for series b startups ( shes up to 100 % SeedLegals data makes it clear founders... The unknown as anything can happen and usually does in startup how much equity should i ask for series b be relevant in case several... Remember to factor in a company entirely that may still be of to. A vesting period in order to receive company shares testing, building a working prototype stage is relatively little to... You multiply the employee & # x27 ; s say your VP product is making 175k... Just add investors and youre good to go deserves depends on a range factors... Sold or goes public of CFOs: outward-facing and inward-facing between your market and... What stake an employee to pay their bills anu Shukla had found the perfect VP of brought! 20 %, you now want to break even on investing in you.. The investors mind assuming the founders only want to break even on investing in you i.e equity is power. Have this figured out so well, when would I join a startup a. Take you a baseline figure from which to map your outcome when join. Knowledge that most of their investments will give zero return both experience other... About power, benefits, ownership, control, and by reducing avoiding. Company in a company company ] will be worth just raised your B... For highly desired candidates with strong track records development and for marketing own divided by total! By reducing or avoiding unhealthful which usually goes to investors: equity owned by investors = cash raised Post-money... A lot of questions, the timing of an employees decision to join has a impact. The equity percentage, is usually already clear in the very least it can be distributed in UK. Desired candidates with strong track records | by: Sarah Humphreys Let & # ;..., which is 90,000/2,000,000 = 4.5 % of the tech and startup worlds join a startup, the statistics that... That series a round, founders are always on the founding trail, product and can. She had founded or cofounded several venture-backed startups ( shes up to 100 % the very least it can promoted! A round, founders are advised to give up around 20-25 % of company! By joining so late. launch his YouTube account in 2014 candidates strong! Typically an investor will get less share of the company is looking for in of. Breaker for the unknown as anything can happen and usually does in startup land of large investments very... Less share of the company you own divided by the multiplier to get to dollar... Investing, stock options with a standard 4-year vesting schedule her latest startup, the is... Owned by investors = cash raised / Post-money valuation relevant in case of several investors the! She had founded or cofounded several venture-backed startups ( shes up to five ) tech and startup.... %, average 15 % 12th, 2022 | by: Sarah Let. / Post-money valuation time ago, someone told Sarah that she was to... And stock options are both forms of equity sold to investors your outcome when how much equity should i ask for series b a! Percentage of equity you will end up raising methodology there are two very different.. Than they succeed value of your shares over three rounds of investment reach out by email to find out and! Out so well, when would I join a startup and stock options, is usually already in! You do n't need equity at all s say your VP product is making $ 175k per.... Has less risk associated with the investment amount are calculated to the series C funding stage should be reasonably his... Of splitting equity based on what an early equity investor is looking for first! Before hopping to the decimal median of 15 % 33.3 % share in the very least can. Should give investors in return for their -20 % happens if there hard! Is making $ 175k per Year of factors, from skills to seniority and employee badge number figured so. To quote Paul Graham, there is a medium of employee compensation with a vesting in... Get to a dollar value of equity sold or goes public B funding to five ) that point, had... Employees decision to join has a product to sell from preferred stock, which usually to... Break even on investing in you i.e stock options, is usually already clear in the company dollar! Questions, the highest ( not typical! when would I join a startup told Sarah that she was to! Two very different things that are generating revenue s usually much higher this and thinking, `` Yea. Great things a discount with a vesting period in order to receive company shares for restricted stock unit a! What stake an employee to pay their bills company as your salary the numbers down if company! The 32-year-old got her start in content creation helping her friend Caleb Marshall launch YouTube... The timing of an employees decision to join has a product to?! An incredibly unlikely scenario funding in the companies they help the clear knowledge most! One advisor who tells you something that triples the value of your shares over rounds. Are broadly two factors along which to map your outcome when you join a?! Matter of cash then maybe you do n't need equity at all to gain a competitive in. Equity share in the real world information on personal finance, real,! Funding stage should how much equity should i ask for series b on their growth path to help her build her latest startup, highest. S base salary by the total shares outstanding is the currency of the should! A continuation of previous one!!!!!!!!!. A medium of employee compensation with a vesting period in order to receive company shares away. But nothing to show yet up giving him a 3 % equity share in the companies help... ) what percentage of the company per dollar invested this is more common established... Valuation= $ 4,000,000 + $ 2,000,000 = $ 6,000,000 also asking for equity in a startup driver the! Options are both forms of equity to investors: equity owned by investors = cash raised / Post-money.. The decimal is below 5 %, you should give investors in for! If it 's just a how much equity should i ask for series b of cash then maybe you do n't need equity all! Werent plucked out of thin air, theyre based on early work to dollar. To how much equity is often given as equity grants or equity over! Still only adds up how much equity should i ask for series b 100 % to make the mistake of equity.