

Ask HN: How much should be my equity? - neebz

I am joining a startup as a co-founder.<p>The founder has raised a small amount of funds. He is willing to pay me salary (which is less than the market-rate) plus is willing to give me 6% equity.<p>Is 6% equity enough (when I am being paid) ? or paid founders even given any equity?
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stonemetal
There are two views I would consider valid. One, you are a co-founder getting
some split of the equity. Who then turns around and sells your equity to the
other founder(s), this is where your salary comes from. Second, You are really
employee number one. The founder(s) are giving you a nice title and a sign on
bonus of 6% equity.

On the whole you give way too little information on the deal to make a real
call. Though it sounds closer to the second option than the first.

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sprovoost
I agree with option 1. But in order to calculate how much your salary is worth
in equity, you'd need to estimate the worth of the company at some point in
the future, your hourly rate and the risk that is involved. In his case, if
there is already funding, you could take the value of the company at the time
of funding as a benchmark. If they got funding from a well established angel
investor or VC, you also have an idea of the odds for success (1 in 10?).
What's the going rate for a full time developer? Just multiply et voila... You
know how much equity you want for your first year of work.

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sprovoost
But I already see one problem with this: your co-founders are probably working
at a much lower "excepted hourly rate". I've heard people claim that the
average silicon valley entrepeneur earns less in 10 years than someone working
at McDonalds. In other words, you may need to be willing to accept an
irrationally low amount of equity if you need a cash salary.

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chrisbennet
That's 6% [6% of the company stock] _before dilution_.

Depending on the type of stock, you can end up with squat [.0001% of the
company] when the money actually comes in.

If it really was/is a cofounder position, wouldn't your equity would be
comparable in % and type/preference to that of the other cofounder(s)?

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tsewlliw
6% equity + salary isn't a co-founder. You're an employee.

