Compensation at a Seed Stage Company

Walmart.com rand.randm
Apr 12 15 Comments

A seed stage company with 600K raised is offering my cousin 80k base and 0.5% equity. He has 2 years of experience and works for a series B startup as Front End/ Full stack engineer. TC 120K with 25K options. His company is not on blind. Is this a fair offer? Thoughts ?

My TC: 375K

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TOP 15 Comments
  • Sina.com / Eng
    WLB

    Sina.comEng

    PRE
    Facebook, Apple, Amazon, Netflix, Google
    BIO
    Software Engineer and former phd candidate in biophysics
    WLBmore
    ask your cousin to post
    Apr 120
  • Dropbox systest
    Bad offer if Bay Area. How is he going to live on 80k base with illiquid options?
    Apr 130
  • RichRelevance zodian
    Lol he should ask for 600k
    Apr 120
  • Google / Eng🍑☁️
    Is this in the bay area? That base might make for a tight budget.

    Also, is equity options or RSU? If it's options, what's the total cost to exercise?
    Apr 124
    • Walmart.com rand.randm
      OP
      These are options and he will sign 83b . He will be paying 50 cents and will have to file 83B. My guess is that he will exercise at time of grant with a cliff of 12 months and company will buy back any unvested at the price they were bought if he leaves or is terminated . Is there some online documentation I can refer him to? He will be first 2 engineers and that is what excites him the most :-). Equity part is a bit tricky.
      Apr 12
    • Google / Eng🍑☁️
      50 cents per share? How many shares? (Also I don't know of any online resources; not really my area of expertise, sorry)
      Apr 13
    • RichRelevance zodian
      $0.50/share with $25k options equaling 0.5% equity. So the company is valued at $5m and he may purchase 50k shares, correct? That would mean the $600k raised took 12%. Look into share dilution clauses. While the equity can seem high in the early stages of a startup, it can get diluted by new investors coming in (see Facebook for an example of this) -if he does not sign a share dilution clause, then the company will likely issue new shares to attract incoming investors down the road (with previous investor's shares multiplying to match their initial equity, and employees shares remaining same).
      Apr 13
    • Walmart.com rand.randm
      OP
      Thanks ! This was my advice for him based on various answers I received here and on IM. I told him to take the offer if he can forgo significant savings for at least a year or two in a hope to get richer than most of his peers who are in cushy corporate jobs. If he believes in the management and has good feeling that working there would have a significant impact on his career, in the company or outside it . Take it! But even with the best management the probability that he would make it are less than 1 %. Keep the risk in mind before getting swayed by the reward. At the same time, those who take these 1% risks get rewards disproportionate to most of us who are stuck thinking about marginal averages and regretting not taking a chance on the hindsight. I regret not taking chances early on with some of the unicorns that are going IPO this year. At the same time I am thankful for not taking chances with few hypes that turned bust. While you can not control your destiny you definitely control your career and what you make out of it. Take chances early in your career that improve your overall career. By serendipity or by virtue of your experience you might end up at a less than 1% place that can change your career and life for good! Peace!
      Apr 14
  • Amazon Day200
    this equity seems high for 2yoe
    Apr 122
    • Walmart.com rand.randm
      OP
      This is the first logical answer ... thanks! I have no idea what is high and what is low here. He asked me and I deferred to the collective wisdom of the crowd on Blind!
      Apr 12
    • Walmart.com rand.randm
      OP
      I thought the base was low at 80k and they compensated it with equity, which in my opinion might only be important if company does well.
      Apr 12
  • Walmart.com rand.randm
    OP
    Thanks for your time typing to respond . He does not have blind . I hope you know that not everyone can get on blind.
    Apr 121
    • New laylou
      Any company associated email address is a valid address so I don’t see why not they couldn’t get on.
      Apr 12
  • New / Consultant
    PinkJacket

    NewConsultant

    PRE
    Google, Techstars, Mozilla
    BIO
    I'm me.
    PinkJacketmore
    0.5% is low with that much funding. I would demand no less than 1% if not more. It's probably worthless anyway. But that's start-up life. 14% of all their money isn't unreasonable. It's really more like 18% after payroll taxes. So I wouldn't expect more base. But 0.5% equity is an insult. Maybe see if they'll offer 8 weeks vacation since they simply can't afford to pay a decent base.
    Apr 160
  • LinkedIn 23333333
    Hmmmm
    Apr 120

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