What kind of equity should I be looking for? - Tech Startup


2

I am currently the Director of Engineering for a tech/website startup in NYC. I was hired in Nov 2010 after they obtained an angel investment of around 1 million dollars. I am the second tech hire.

I have experience as a software developer and website developer since I was 12 years old. I had been working as a freelancer for two years prior to being hired by this company.

I work 60-80 hours a week (every week), am responsible for most project and product management, and I am responsible for most communication between the tech team and the co-founders.

My current salary is 60k a year (soon to be bumped up to around 80-100k) and I have about 0.1% equity.

I currently feel like I have been severely undercut in equity. Can anyone give me some advice on what I should do, an answer on what kind of salary and equity I should be looking for, or any other kind of advice someone could provide.

Thank You!

Technology Development Equity Web

asked Aug 5 '11 at 07:50
Blank
Commander
111 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll
  • How does your salary compare to the local market rates? You only really have a 'right' to a stake if you're taking a low salary to contribute to the company. – Greg Sansom 9 years ago
  • How old are you? Might be relevant... – Moak 8 years ago

3 Answers


2

Second tech hire, director of engineering title... Sounds like 0.1% to 2% to me. So you are on the very low end of the bracket. Of course, it all depends on so many factors, you can't tell for sure.

If you are in the first 5 employees, and you believe your role is critical, then negotiate hard. But be ready for the possible outcome that you may have to leave the company with nothing, if your demands are rejected.

answered Aug 5 '11 at 08:53
Blank
Alain Raynaud
10,927 points
  • 0.1 - 2%? that's quite the range :P – Commander 9 years ago
  • Unfortunately these ranges are wide, since this amount depends on how big is the option pool they made, how many founders are there, how many more people they're planning to hire... – Veronica 9 years ago

1

You've been working as a web dev since 12? Is that 2 years, or 20? (sorry, there was no context in your post).

Equity is going to be a factor of what you bring to the table, proven results. If all you have done before is freelancing, then you're not going to be in as much of a position to demand a large equity stake.

Titles are nothing, so don't get too hung up on that.

I'm going to guess that your equity stake is about right, maybe a touch low if you really are inexperienced and they took advantage of that. I wouldn't expect more than .5%, maybe 1% if you're expecting heavy dilution.

answered Nov 3 '11 at 11:13
Blank
Brian Karas
3,407 points

0

0.1% of a $1MM dollar company equates to $1000/4 years = $250/year in extra pay. Your equity is miniscule, but as long as they're paying you as much or more than you made as a freelancer, then your negotiating position for additional equity is weak.

answered Aug 5 '11 at 08:23
Blank
James
1 point
  • He said that 1 million was the amount of funding received, not the valuation of the company, that hopefully is much more. That said, calculating the "cash value" of equity stakes is always very speculative: if the company becomes big as facebook his 0.1% will be worth millions, if it fails of course it's $0. – Veronica 9 years ago

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Technology Development Equity Web