Equity here means stock, espp, options etc everything. Assume (for simplicity) that a typical unicorn has more than a 100 engineers and there are 10 folks with heavy titles like CEO, CTO, VPs etc. If the big folks take 5% stake on an average, then rest 100 are left with 50% stake, each with 0.5% stake (assume equal division for simplicity). If the company IPOs @ 1bn, then do the engineers get 0.5% of 1bn = 5mn each? If the above math is correct, then is it kind of useless to join a startup whose valuation is expected to be less than a billion OR whose engineering strength is already crossed 100? Note: The math here is to make sense of 0.x% offers from startups and had to simplify a few things to make it easy. So is there anything glaringly wrong with the above math? Dont want to talk about ultra-unicorns where 20 engineers team sold for more than a billion
So if company size is more than a 100, then a billion plus valuation is necessary otherwise new joinees would probably not benefit much with less 1% of stocks (which they "might" get after couple years of hard work)
Also consider 95% of startups don't hit liquidation event. So if you are joining early then 95% likely the equity means nothing. Hence either ask for more cash as part your base pay or join a late stage startup that is giving you RSU vs options/equity.
This is literally against the whole point of taking the startup gamble. You don't go a startup to ask for generic RSUs. Joining a startup at a lower level and 3-4 years before IPO will net you similar to Principal level RSUs at BEST. Go big or go home is my recommendation, and get out when your gut says the leadership sucks.
@Splunk, what if you join at the Principal level before the IPO? How much equity can you hope to get? I doubt it will be as high as 1% because of the rough calculation in the initial post.
Bad assumption that each engineer gets 0.5%. may be few those who joined before Series A. Anyone after Series B - best case scenario is 0.15 or less. Also there's an employee pool usually 10% or less. So that 50% concept won't work.
You mean to say that regular engineers would get way less than the calculations in the initial post? Who can get that much? Director or Principal engineer?
After series B - Director / Principal - depends how they negotiate but may be 0.2 to 0.25%. Best 0.3%.
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Yes there are also things like dilution, down rounds, liquidation preference for investors to consider.