Binner82

VP Europe

Equity Offer

Background:

Series B start up - valued over the unicorn status and have 50 customers in first year selling. $200m in the bank. Tracking towards 10-12m ARR in first 12months. 20 reps globally. Every one has done at least one deal and 3 will earn over $1m in the first year.

Current equity offer to reps - $300k current value, 0.027% ownership (approx).

What does the WR think of this on the face of it? Value your opinions and commentary as well as the poll.

I personally feel this is a strong equity offer would value your opinions.

cheers!

Views on equity offer

Attached poll

*Voting in this poll no longer yields commission.

📉 Equity

📠 Startup

23 comments

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TennisandSales

Politicker

Head Of Sales

What type of equity offering is this?
How many shares outstanding?
What is the goal of this start up? (Sell, IOP, ect)

These questions would be good to know to tell HOW strong of an offer this is.

But I’m my mind? I just want to know if the equity offering is ISO or RSU. I’m guessing this is an ISO offering which might not REALLY mean anything. TBH.

Is the comp besides this strong?

Binner82

Fire Starter

VP Europe

Some good questions here. Goal of this organisation is to IPO - founders have been incredibly successful previously. These are Share Options rather than RSU’s - the day one value mentioned above is difference between strike price and FMV (so ‘real’ paper value) :-)

Comp is 17% moving to 35% top end. Uncapped.

TennisandSales

Politicker

Head Of Sales

Cool! Glad you know the details. If it was me i would take it!

saaskicker

Tycoon

Enterprise AE

the big difference in shares vs rsu's is you'll have to purchase them out of pocket - i'd use that as a calculation on the actually value.

FMV - Price to purchase = equity comp

the hardest thing to predict is further dilution. if it's series b today, to get to IPO it's going to go to at least series D or E in my experience, maybe a debt round to help dilution.

all that aside 300k is above average for most equity compensation for sales reps at that stage. which makes me more skeptical, but the numbers are impressive.

TennisandSales

Politicker

Head Of Sales

nailed it.

ChumpChange

Politicker

Channel Manager

Sounds pretty sweet to me!

Coffeesforclosers

Notable Contributor

Director Sales and Market Development

Id want a set amount of shares, otherwise they will keep diluting the % until its virtually worthless as they keep offering .0002% of equity to people. Based on valuation today vs actual that % is tough, i would want a fixed #

CuriousFox

WR Officer

🦊

Yup. This kinda shit is sneaky.

Coastal_crusher

Politicker

Sales Director

Kinda depends on your history and how good you are but sounds like a good deal. They still hiring? 👀

payton_pritchard

Executive

RSM

It's really hard to say without way more details.

If I had to take a guess -- You say current value but I'm assuming you mean most recent valuation which was determined during the Series B raise. Given that this company has a billion $ valuation and less than 12M ARR it's fair to assume that this raise was completed a few months ago or longer when the macro outlook was far better and multiples were as insanely high as what you're describing (100x+).

I'm no VC and know nothing about your company so this is all a guess, but I'd assume that the current valuation is at best 500M, more likely less. Companies raise funding and get high valuations, but then the hard part is executing and actually earning the valuation post raise. You're also at the bottom of the liquidity preference chain and no valuation means anything to you unless there's a positive exit (extremely rare, although your company seems to be on the right track) or a subsequent raise where investors buy employees out (unlikely). Between 4 year vest, taxes, strike price, dilution from future raises, etc. etc. you need a lot to go right for this to be worth 300k+

More important than the equity is that this seems like a high performing sales team and an opportunity for you to make a bunch of money and get experience in what seems like a hot market.

TLDR: 4 year vest and a valuation that's most likely already underwater. I'd operate under the assumption that the equity is worthless and any money you get from it is a bonus. Job seems solid though, I'd take it.

Sunbunny31

Arsonist

Sr Sales Executive 🐰

I am sorry - I can’t even tell how I voted on this poll, but whatever I picked was accidental. Based on your info to Tennis, I was going to say it sounded pretty good. Of course they want to get to IPO - that’s pretty much every startup’s goal, and the standard cautions about not buying into the hype and taking a hard look at the reality of sales for the next 2+ years apply. Sounds like you may be fine, and it’s certainly worth considering. Good luck!

Binner82

Fire Starter

VP Europe

Thanks @sunbunny.

Pachacuti

Politicker

They call me Daddy, Sales Daddy

$300k is just enough to keep the big earners around.

chloe

Account Executive

If there are reps at this company making $1M, I think that’s what you should be weighing greater than the equity package. Like a lot of folks on this thread have stated, every company wants to go public and hopes that these shares might be worth something someday. However, I’ve learned it’s more important to pay attention to what the W-2s look like and be less focused on a hypothetical pipe dream ESP with how crazy the market has been. Just my two cents!

DungeonsNDemos

Big Shot

Rolling 20's all day

Solid offer from what I've seen. Have they stated any goals for down the road, like a specific type of exit event?

Justatitle

Big Shot

Account Executive

How is the equity offering structured? Is my big question

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Here’s the thing, you have options and that means that it is only worth something if the company increases in value and you have it at a high value now. If the company doubles in value and exists, and you stay the full vesting period, you get $300k. How likely are both of those things to happen? It’s a risk and right now the cash is what’s important.

Binner82

Fire Starter

VP Europe

Thank you guys. Most appreciated. There is a fixed amount of shares (not just a percentage) which is great and the company have even provided a spreadsheet which takes into account “expected” future dilution at each of the next raises. Obviously, this is all subject to change/tweak depending on results, market conditions etc.

In terms of the stock type - all shares in the company are said to be equal (no preferred stock - founders, VC’s and the ESOP are all the same type of shares)

The offer is $360k at 50/50 with a five month guarantee.

They talk about an IPO in 4 years (doesn’t every company when hiring at this stage though!!)

cap

Opinionated

Enterprise Sales

Definitely a strong offer. Treat the equity as a bonus, but don’t expect it

IYNFYL

Politicker

Enterprise SaaS AE

I take it with a grain of salt. I have equity at my current gig but have to stay here 3 years before it’s released. Most reps stay until 3 years and then bounce which backfired on the company

DefaultSalesDude

Executive

Director

Is there an alternative comp program if you don’t take equity? From some I have seen, they offer a lower comp plan if it has equity included or a higher comp plan without. There was a study a while back where someone did the math and said it was much better to take the higher comp (without equity) in the long run due to the number of times startups dilute over and over again and rarely hit the numbers needed to get the next tranche of money for their raise. Plus it allowed them to hop from job to job increasing pay rather being locked in for years at a company that wasn’t hitting the mark.

cashingchecks

Executive

VP of Sales

thats a great IC equity offer

detectivegibbles

Politicker

Sales Director

This sounds great regardless of equity IMO.

$300k and over $1 mil earnings? What's the worst case? You make some pretty incredible money for 2 years and shares don't pan out?

I'm probably missing something as my start-up experiences have been shit.