Compensation at a Seed Stage Company

Apr 12, 2019 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
  • / Eng
    WLB Eng

    Facebook, Apple, Amazon, Netflix, Google
    Software Engineer and former phd candidate in biophysics
    ask your cousin to post
    Apr 12, 2019 0
  • Dropbox systest
    Bad offer if Bay Area. How is he going to live on 80k base with illiquid options?
    Apr 13, 2019 0
  • RichRelevance zodian
    Lol he should ask for 600k
    Apr 12, 2019 0
  • 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 12, 2019 4
    • 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, 2019
    • rand.randm
      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, 2019
  • Amazon Day200
    this equity seems high for 2yoe
    Apr 12, 2019 2
    • rand.randm
      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, 2019
    • rand.randm
      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, 2019
  • rand.randm
    Thanks for your time typing to respond . He does not have blind . I hope you know that not everyone can get on blind.
    Apr 12, 2019 1
    • 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, 2019
  • New / Consultant

    New Consultant

    Google, Techstars, Mozilla
    I'm me.
    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 16, 2019 0
  • LinkedIn / Eng 23333333
    Apr 12, 2019 0


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