thinking about taking an offer from a startup, they do a hundred mil or so or revenue, not yet break even, valued at 250-500 mil. they cap their salary between 150-170 and only offer options, with a $1 strike price, they forecast 5-7x in 3 years. startup has room to grow and they want to bring me on as the first product manager (ive got 10 yoe). options are basically 75k options vested over 3 years besides options, what other ways to negotiate. i will be in charge of buildinf the intenral backend software and worktools which we may try to platform and license out in the future. i woild support the current buildout as well as plan for the future platforming of the software. sky is the limit on the b2b side how do i take advantage of my role, what are other equity related opportunities i can ask for? id like to capitlize as much as possible on what I will be in charge of and build in the long run. never negotiated with a startup before so could definitely use help!
Those 75K ISOs are a percentage ownership in the company. If you know the number of outstanding shares, you can see how much you would own. For instance, if there are 100M outstanding shares, 75K represends (75/100000) = .075% of the company. Even if they don't tell you how many outstanding shares there are, you can take a guess. Since their last funding round valued them at $250-500M, their latest 409a valuation is probably much lower. Say, around $50-100M (wild guess based on past experience). Then, since the strike price (FMV of the shares is based on 409a valuation) is $1/share, that means there would be 50-100M outstanding shares. Consequently, we could believe your ownership of the company would likely be between 0.075% and 0.15% (there are large error bars, of course). That seems like a decently good offer for a company of their size
Oops, this was supposed to be a reply to the other thread...
What funding round are they? How many outstanding shares are there? How many employees are there? These are important things to know. Percentage of the company is much more important than # of shares at any size of startup. How many more funding rounds do they expect before a liquidity event? What are the terms of previous investment rounds? This can affect dilution. Good luck getting all of this info but if you get even some of it, it could help. Startups vary wildly on what they will tell you. I don't understand your question "Besides options, what are other equity-related opportunities to negotiate for". Your options are your equity at a startup. You absolutely can and should negotiate them. Why wouldn't you? Edit: I realized maybe your question is more about the role... At startups, roles are flexible. If you perform well, you should be able to go as far as you want impact-wise. Plus, if you're truly the first PM, you should have a lot of say in your priorities and what you will own... As they bring more PM on, they should give you the choice of where you want to be positioned (again, performance-dependent). As a general rule, pick a startup you believe in (product/market/team/etc.), negotiate as much equity as you can, then do your best to make the startup successful. If you work hard and do a great job, you'll be a highly respected member of the team and have no problems.
Vow you are very knowledgeable, thanks for sharing your insights. I have one startup offer, trying to evaluate. Can I dm you? I have a brief question
Sure thing