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Startup equity negotiations

I have my final interview with a unicorn startup tomorrow, which I'm expecting to go well. Equity in the company was one of the selling points to me, but I haven't yet worked a job with this included in the offer. What tips do you savages have on what to look for/negotiate on the offer?

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13
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SkiSquaw
Praised Answer
+1
Account executive
Going through this process right now. These are the questions I wrote down to get answered before attempting to negotiate the equity -ย 

1. What's the valuation of the company?
2. What is the estimated market value of the equity offered?
3. How much company ownership does this represent? i.e. - how many outstanding shares are there?ย 
4.What is the strike price?
5. What does the equity refresher schedule look like, if any?

This Forbes Article is on point as well:ย  https://www.forbes.com/sites/valleyvoices/2019/04/15/10-questions-to-ask-when-valuing-your-equity/?sh=4e5ae7295c98

Totally depends on the role you're interviewing for, stage of company, etc. for how much equity you'll get. If it's a unicorn then you'll likely get less equity but could always offer to take some of your base salary out and apply that towards equity in the company.
SADNESSLieutenant
Arsonist
+8
SDR
this is such a high grade comment

Da
DaveFromCollege
Notorious Answer
+7
Account Executive
This is useful, thanks!
theCommishioner
Opinionated
+6
Account Executive
Great info, thanks!
CadenceCombat
Tycoon
+13
Account Executive
Wow, love this! Thank you.
KBDOS
Good Citizen
US Sales Director
Great Info !!!
Sea_Rawd
Praised Answer
Account Executive
A question related to what happens in the event of a Change in Ownership would also be something worth noting. (i.e. acquisition)ย 
MrMotivation
Politicker
+4
Sales
This is an underrated comment. I got the short end of the stick when this happened early in my sales career.ย 
CadenceCombat
Tycoon
+13
Account Executive
Good tip. Thanks!
sahil
Celebrated Contributor
+14
Deepak Chopra of Sales
There are 3 things you need to know re: equity negotiations:

1. Properly value the equity - At a later stage >$1B startup, you don't need to know % ownership. I can tell you, it ain't a lot. But you don't know your % ownership of Bitcoin or Tesla either. Cuz the net value is high enough. So when they offer you equity (IE - 1,000 shares) ask what was the last strike price. Also ask what the discount to the preferred price is.


There are 2 classes of shares: the price employees pay and the price investors pay. As an employee you get a 60-90% discount on the shares. So to understand the real value of your equity, multiple # of shares x preferred price. It'll be more than you expect I'd imagine.

2. A "fair" offer for software engineers and other technical hires is to have 1 year salary in equity. Sales gets a fraction of that. It's bullshit. One way to potentially handle: ask to lower your OTE to get more equity. Tell them you are joining cuz you believe in the company, want to stay for a long time instead of being a typical 18-month rep, and want to set up a long term plan. Try to ask for 1 year salary in equity. May not work. But you're a sales rep... negotiate a little.


3. Change of Control - @Sea_Rawdย mentioned it earlier, but this one is critical. Ask for double trigger acceleration. It means that if the company is acquired, and you get let go (very common in sales), all of your equity vests upfront. Otherwise you won't get shit.


Good luck! ๐Ÿ€ ย 
CadenceCombat
Tycoon
+13
Account Executive
Damn. Is there a โ€˜saveโ€™ function? Iโ€™d love to come back and refer to this post in the future. @sahilย 
theCommishioner
Opinionated
+6
Account Executive
@sahilย thanks so much for this! very helpful info
Trinity
WR Officer
+7
BusDev
Ask about the vesting period, if you're entitled to it when you leave voluntary/involuntary, or they may be a clause in relation to going to a competitor. I would also check the value of the equity if it's current/future market value when it's vested or if you exercise your options.
salesnerd
WR Officer
+16
Head of Growth
So I have good news and bad news.ย 

Good news: you equity is likely to be worth more than $0! Youโ€™re working for a unicorn, which means the company is well established, youโ€™ve found product market fit, and youโ€™re likely to see an exit on favorable terms.ย 

Bad news: youโ€™re not gonna make much money. Unless youโ€™re a VP level or the company is foolish with their equity, joining this late in the game, you might make $5k when the exit happens. The strike price of your options is going to outweigh most of the profit youโ€™ll see. Donโ€™t focus too heavily on the options of a unicorn. Focus on growth potential and OTE. Thatโ€™s where youโ€™ll make most of the money.ย 
theCommishioner
Opinionated
+6
Account Executive
That's disappointing to hear. Luckily the base and OTE are very favorable starting without me even negotiating that yet
salesnerd
WR Officer
+16
Head of Growth
Nice! I mean, you should absolutely ask the questions others have mentioned, but donโ€™t think youโ€™re going to make life-changing money by getting in this late to the game.ย 
FullyDiluted
Opinionated
+6
Account Director
ALWAYS ask for the double trigger
theCommishioner
Opinionated
+6
Account Executive
Update: I was offered 5,000 in options that vest over 4 year period. Have to be with the company for at least a year to start exercising the equity. The strike price is $1.50 and the market value per share is ~$10. Unfortunately, no room to negotiate the intial grant but opportunities to earn additional with tenure and achievements.

Apparently, they've only agreed to double trigger acceleration for the CRO so far, but I have requested it be added to my offer letter.ย 

Thanks again for all the helpful info!
Sales
WR Lieutenant
+4
Jedi
Ask for the cap table. They will probably say no but you should ask how many shares in the company are outstanding.ย 

The amount of shares you receive is only as valuable when compared to the total amount.ย 

IE: if a company has 100,000 shares in total and they are offering you 1000 shares, then you effectively would own 1% of the company. If another company has 1M shares and they offer you 1,000 shares, then you own 0.001% of shares.ย 

If it's already unicorn status, the stock plans are usually not great since most of the equity has already been distributed. If they go public, it could result in a nice influx of cash.ย 

For established companies, it's usually easier to negotiate a higher OTE than it is to ask for more stock.ย 


SalesPharaoh
Politicker
+8
AM BDR
Simply ask what stock options they offer? And check glassdoor
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