Equity when joining an established business
Given an offer to join an established company, earning at least a couple of million a year in revenue (under 10 employees) and which is a subsidiary to a multi billion dollar parent company; what is a reasonable amount of equity to expect or be offered?
The project I would be expected to complete is large and complicated and could damage the company significantly it if it goes wrong (A port of their entire codebase).
There has been mention that 10% of the company has been put aside as employee options. How does someone go about determining how much equity is fair?
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Will you be getting a salary as well? – Zuly Gonzalez 12 years ago
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Yes about market rate in this part of the world, perhaps slightly above – Maxim Gershkovich 12 years ago
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The red flag I see is that the company is a subsidiary, so really it's owned by someone else already. You can't expect the subsidiary to behave like an independent company. My answer would be based on the number of employees: expect 0.1% to 1%. – Alain Raynaud 12 years ago
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Equity allocation is interesting but is this really a startup question, especially since it involves joining an established business earning "a couple million per year which is a subsidiary to a multi billion dollar parent company"? – Henry The Hengineer 12 years ago
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Yeah I questioned this myself. Hopefully you'll excuse me asking it but given it is a question about equity distribution and how it can be accomplished fairly I feel like it has some relevance. – Maxim Gershkovich 12 years ago
1 Answer
Founder's type of equity is/should be a non-option at this point. The risk is relatively low.
If you are coming on as a salaried employee, as a long-term, key and/or a high-level one, the company may be interested in incentives to get you hired. This means a really small share of equity < 1%, or much more likely, some sort of stock option plan where you don't get equity, but are given the chance to buy at a preferential rate from that allocated pool .Otherwise, it's just salary, and for a somewhat important role, it may be a higher-than-average salary to make the search faster and more fruitful.
