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Thank you AAPL and NVDA
Hey everyone, I recently received an offer to join an AI start-up in New York that recently raised Series A somewhere around $30million-$40million (they wouldn't share exact figures because things are not finalized). The total company size is below 10 with only 4 people working on the tech/product directly. I am going to be the 5th software eng on the team. They offered me a competitive base similar to FAANG for my level and equity of roughly somewhere between 0.1%-0.2%. I can't calculate exactly since they won't share their total number of stocks after Series A dilution but I got a sense that the Pre-Series A options make 0.2%! My experience is ~2 years and I've directly worked on the product they are building at another company for ~1 year. My question to you guys is, are the stock options (20,000 options / 0.1-0.2%) offered competitively? I expected at least 1% to join so early, I will be employee # 9 or 10. Thanks! TC: 300k
What’s the revenue of the company? 40 million raise with <10 employees and no revenue means your equity is most likely going to be completely worthless, regardless of whether the grant is 0.2% or 1%. Why? Because of phenomena called “preferred liquidity” and “over capitalization”. Your shares are going to get diluted to nothing, and any kind of exit likely will not hit target, meaning the VCs and subsequent investors will take the lions share of the exit volume, the founders will get most of the rest, and early employees such as yourself will have to share the (likely paltry) leftovers. Focus on the guaranteed cash to evaluate the offer, and consider the equity to be the statistical equivalent of a lottery ticket
EXACTLY!!!!
They did not disclose their revenue, just said it was negligible at the moment but their product is hot and has potential to bring in millions within the next year! They have 900k users already but so far they do charge them to use their service. Thanks for your insight!
You have approximately 2 years of work experience and approximately a year on the product ?? This seems like a reasonable Stock Option offer if I read this correctly . BTW - If they are looking for a Product person - I have Director of Product experience at a Startup.
Thanks for your insight! I had 0 clue if this was reasonable, hence the post. Ill keep this in my incase they are looking for a product dude!
No worries. I had questions when I joined a startup too!! Like others have said - startups don’t always go as expected- Salary is a much more important concern. 😀
Yeah that equity is effectively worthless. Imagine it’s a $40M raise and they give you 0.2% (best case numbers). That’s $80k in equity total. Assuming 4 year vesting, that’s $20k a year. That’s nothing.
They argued someday it might be worth much more, i am not sure i want to give up Meta RSUs for this...
A series A/B startup will never beat the present value of equity from public company. You have to be interested in the mission/growth and assess a likelihood of 10-50x equity increase. Financially speaking when considering odds of failure, startups are rarely worth it vs big tech
very competitive. do not join until the A actually closes and the shares have already been diluted 1% for 2 YOE share some of the crack with me?
Things I learned after leaving comfortable high paying tech job for a startup: - How much ownership of the company does the CTO have if the CEO isn’t an engineer? Having a competent engineer as one of the main owners can define if you’re prioritizing heavily on what’s important as a product or just blindly cutting corners and taking on more operational burden. - The amount of funding a company has does NOT define their potential success or product market fit. If anything, I find it suspicious now if founders accept TOO much money than they really need. - It’s a red flag if founders are not able to hire their first few employees directly from their network (I.e. previous colleagues, school connections, friends of friends who are more than happy to send their people to an awesome team they trust). - people show if they are true leaders in bad times. Startups will have a lot of bad times. Grill them with your own behavioral questions. For bonus points, get “references” on them by perhaps finding mutual connections on LinkedIn/etc. - transparency - even at this stage you deserve this. You should get the full picture of your ownership before signing. Additionally, you’re employee <10. You will be in the trenches as much as they are. Ask details and be wary if they’re hiding or coloring some information.
How do you have TC 300K?
He is IC3
Meta to the moon
Your expectations are unrealistic. 1 you are employee 10, not #2-3 2. You are getting a competitive base 3. You have 2 yoe .1-.3% is probably realistic in that scenario
Thanks for the evaluation!
1%+ out of the gate would be for a very senior employee in employees 1-5; you probably already need to know the founders to get this. But, a fun thing about a startup, you can just talk to the founder about how your % might grown into given refreshers/bonuses assuming you perform at a high level.