

Ask HN: Fair terms for CTO position in funded startup? - ctooffer

As a freelancer I&#x27;ve architected &amp; built the technology behind a client&#x27;s startup, which is currently in beta, and is valued at $2M, based solely on investment. They&#x27;ve made me an offer to come on as CTO; I&#x27;m unsure of how good the terms are. Can other CTOs (perhaps anonymously) post what terms they joined the company with?<p>1) The position would be a &quot;co-founder&quot; CTO; however, it would not have a board vote. The funders are splitting votes between them 50&#x2F;50.<p>2) The base salary is $150k, which is in the bottom 10% of CTO salaries across all company sizes in the region (according to salary.com). The salary rises to $225k once the company is making $500k in profit. However, there&#x27;s no sales&#x2F;marketing budget, as they want to grow organically. I&#x27;m earning $120&#x2F;hr contracting for them; I have new clients lining up willing to pay $150&#x2F;hr.<p>3) Equity is 7.5%, with 50% vesting immediately, and the remaining 50% vesting over 4 years, with no cliff. Forward vesting (in the event of a sale) is 50%. The company is an LLC, so the equity represents a profit share. It is dilutable, as are all positions (including current funders).<p>4) Severance &quot;without cause&quot; (cause includes fraud, breach of fiduciary duty, etc) is 6 months pay, plus 100% vesting.<p>5) Benefits are OK. 3 weeks vacation, 2% 401k match (plus 4% at 50%).<p>Is this a decent deal or should I hold out for more? Finding a replacement for me given the complexity of the product would be tough. I&#x27;ve started negotiations, but there&#x27;s no &quot;give&quot; currently, except for the agreement that we&#x27;d research to see what is common.
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aml183
Do you believe in the founders/investing team? Based on what you are writing,
startups should never be LLCs. You should always have 4 year vesting on all
the stock. 50% equity in the first round for investor is way too much. These
are just a few things that stick out immediately.

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ctooffer
With a few reservations, yeah I believe in them, and the product. The
potential client list (people interested in the beta) is quite impressive, and
the product is unique/powerful.

Why do you say that startups shouldn't be LLCs?

The investors have 50% voting each, not equity; the total equity split would
be 7.5% each to CTO & CEO, then the remainder split between the investors; all
dilutable if outside investors get involved.

