The founder asked me what I wanted, I know he has has spent a lot of money so far. He told me that there is 1 other who will be holding a share. What is a fair percentage to ask for?
It really all depends on
- if your putting in any money
- How much your salary will be (market rate or lower)?
- existing investors
- if they're revenue generating
- how long the companies be around
Essentially it's the risk profile of the company that you're coming into.
If it's an idea and your coming in at the ground level and not taking a salary the 50/50.
If it's been around for a while, no investors and some traction or revenue, you'll be paid below market rate, then maybe 3-10%
If it's making money, raised some capital and your a "normal" developer (not a super star) then 1%
The key is that you ask for the Cap Table to truly understand what % of the company the type + amount of shares they're inferring equates to.
10,000 shares doesn't mean much if they have 100M outstanding.
Also, all equity should be vested over 4 years, 1 year cliff.
Answered 10 years ago
Dan's answer is spot on. Based on the facts in your question I would guess you're in the 3-10% range, lower if your salary is close to market. I would add that because of the 1 year cliff, having a large equity stake makes you more likely to be let go quickly if you're valuable but not as valuable as expected to the company. I would say that's largely a good thing, but based on your risk profile you may disagree.
Answered 10 years ago
One other comment I'd add to the other two posts (which are spot on) is make sure the terms of the equity are clearly understood. Consider both the type you're getting relative to the rest of the cap table (typically it's going to be standard founders/non-protected junk equity) and of course the valuation of the company as a whole. Unlike capital investors there won't be much you can really argue from a valuation standpoint but knowing what (and importantly how) they define as the companies total value will help you understand where your money will be going next and how likely they are to succeed at progressing (30% of 0 is still 0 after all.)
Answered 6 years ago
Here are some considerations to help you assess a fair percentage:
1)Evaluate the extent of your contribution to the startup's success.
2)Research the market standards for equity allocation in startups within your industry and region.
3)Remember that equity allocation is negotiable.
4)Assess the time and effort you will invest in the startup.
Ultimately, the decision should reflect a balance between your contribution, market standards, and success of the startup.
Answered 10 months ago
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