
Ask HN: How much equity do seed stage startups give? - hellocs1
I&#x27;m an engineer with a few years experience. I am interviewing with a few seed stage startups and one series A company. I&#x27;m wondering what kind of equity I should be targeting &#x2F; negotiating for &#x2F; expecting.<p>I found this guide (https:&#x2F;&#x2F;www.holloway.com&#x2F;g&#x2F;equity-compensation&#x2F;sections&#x2F;typical-employee-equity-levels) that says at Series-A startups, senior engineers are at 0.33% - 0.66% equity, and junior engineers at 0.2% to 0.33%. Is this still the range one should expect? Any experience here would be welcome.<p>What about seed stage companies? Is that more case-by-case? If they just came out of YC, is there a YC standard for equity that many YC startups follow?
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shoo
You may wish to read:

[https://danluu.com/startup-tradeoffs/](https://danluu.com/startup-tradeoffs/)

and

[https://danluu.com/startup-options/](https://danluu.com/startup-options/)

Quoting danluu :

There are a number of factors that can make options more or less valuable than
they seem. From an employee standpoint, the factors that make options more
valuable than they seem can cause equity to be worth tens of percent more than
a naive calculation. The factors that make options less valuable than they
seem do so in ways that mostly aren’t easy to quantify.

Whether or not the factors that make options relatively more valuable dominate
or the factors that make options relatively less valuable dominate is an
empirical question. My intuition is that the factors that make options
relatively less valuable are stronger, but that’s just a guess. A way to get
an idea about this from public data would be to go through through successful
startup S-1 filing. Since this post is already ~5k words, I’ll leave that for
another post, but I’ll note that in my preliminary skim of a handful of
99%-ile exits (> $1B), the median employee seems to do worse than someone
who’s on the standard Facebook/Google/Amazon career trajectory.

From a company standpoint, there are a couple factors that allow companies to
retain more leverage/control by giving relatively more options to employees
and relatively less equity to investors.

All of this sounds fine for founders and investors, but I don’t see what’s in
it for employees.

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quaquaqua1
If they're willing to give out 5% equity for example, keep in mind that they
would barely have any majority equity left one the table left to give in
future rounds (100 / 5 = just 20 employees).

Unless of course they dilute your shares in the next round of raising, which
they probably will do. So your 5% stake becomes 0.5% when they give themselves
another x amount of shares and you get nothing.

Additionally, large investors routinely chastise founders for having "messed
up cap tables" where there's lots of individual holders of Class A stock that
conceivably should have a say in how the company is run.

Good luck in your hunt!

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hellocs1
Could they dilute people like that? From 5% to 0.5%? That dilutes everyone
else as well though, right (I guess the new shares can be given to the
founders so they aren't diluted).

~~~
quaquaqua1
Exactly, yes. Founders can give themselves 1,000,000 shares to prevent
dilution while giving previous equity holders 0.

It's quite an interesting deception if it isn't explained transparently!

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gesman
Maximize salary/cash pay.

Early stage startup "equity" is worthless.

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hellocs1
If I would maximize that I'd just go to Facebook or something like that.
Sticking to startups for now.

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p1esk
So you’re not trying to maximize salary but care about equity? Not sure I
understand. Equity at seed stage startups is like buying lottery tickets, with
the main difference that even if the startup has a successful exit 5 years
later, you are not likely to get much if you are a salaried employee. Say you
get $100k salary and 1% of shares, which becomes 0.1% after dilution. Say the
company is bought for $1B. You will get $1M. So the total you have made after
5 years would be $1.5M. If you were working at Facebook at $300k/year you
would have earned the same amount. Only the chances of this happening at FB
are close to 100%, while unicorns are called unicorns for a reason.

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muzani
First engineer? I've seen it go as high as 60% especially if the engineer has
entrepreneurship or upper management experience. Some can probably negotiate
for more, but at some point, the other founders lose interest.

If you're getting a salary either freelance or FT, it's unlikely you'll get
more than 10%.

Rule of thumb is that giving equity increases valuation by 1/(1-x). So a 5%
share should increase speed/valuation by 5.6%.

