

Ask HN: Best way to offer equity to someone joining early stage startup? - groktor

Background:
I have a startup I&#x27;ve invested a lot of time (and also money) into already, just about to go to beta and I have someone else who wants to join the team. They would be a valuable asset no doubt and bring skills I don&#x27;t have.<p>I approached them originally about doing some work for me and me paying them for their time. After talking about the project they want to be involved long term, and they have offered to partner in exchange for a share of the company.<p>My concern is obviously how to make sure this is a priority project for them and that they only get the equity once they have &#x27;earned&#x27; it so to speak.<p>I&#x27;m also concerned about just signing over X% out the gates and have been imagining some sort of agreement whereby they have a fixed amount available (let&#x27;s say 5%) which they &#x27;earn&#x27; over 5 years. e.g. 1% a year.<p>If we come to raise VC in the future (I guess crucially, in the first 5 years before they earned their full allocation) would this be an issue? I&#x27;d assume that the VC offer would want a certain % of the company, and then the remainder would be split between us two founders in the same ratio. e.g. 95&#x2F;5<p>What&#x27;s the best way to offer them equity then?<p>Is there any common setup for this kind of thing?<p>Any and all advice much appreciated.<p>Thanks HN :)
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philipn
Yes, almost all employee (and founder!) shares are vested over a period of
time. Typically, shares are vested over 4 years, with a one year "cliff." This
means if the employee (or founder) leaves before the one year has elapsed,
they don't get any of their shares. Then, after this set "cliff" period has
ended, they get some fraction of their total shares each month.

But based on your question, I'm guessing you haven't yet set up your own
founder share structure yet? If so, that's probably the best thing to do
first. Sites like Clerky.com can help a lot like this, and you can figure out
how all the bits and pieces work together with a good amount of googling and
persistence. Of course, if you have some money, talking to an attorney about
this can really speed up the process and help make sure you don't make any
obvious mistakes.

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groktor
Thanks phillipn :)

