I recently met the founder of a web startup who is looking to build his management team. I would fill an executive position on that team.
Last year, the company received initial angel funding followed by additional angel funding in the last quarter of this year. The company is now looking for investors in order to raise Series A venture funding (to broaden it's customer base), and plans a Series B round towards the first quarter of 2011. The founder owns approximately 55% of the company, a significant portion is held by the angels, and the rest (10% or less) is held by a couple other employees.
At this stage in the company's existence, is there a standard approach I should look for around compensation, e.g. considering the following factors?
I'm not certain that I'm asking the question appropriately, but I wanted to use this as a starting point.
There are no standard approaches. Each situation is unique.
I suggest bringing in the following specific numbers that are concrete: a) your current salary b) the valuation of the
startup at the time of the last angel investment, and c) the valuation at which Series A is being sought.
Assuming that you want to join the startup because it promises professional growth and
personal satisfaction a simple algorithm can be applied:
The logic is that you are sharing the risk (of reduced salary) and if Series A closes
as hoped, and at a higher valuation than the last angel, you are already rewarded a bit
(virtually of course).
I don't understand why you would want to be a salaried employee (and pay taxes on your
salary) and also invest your own money.