I’m being offered a position at a startup as an early hire. Does this deal sound good?

(this post is a feed post from my comments on reddit)


focus on if the salary is worthwhile and if the work is good and will help you with your next step.

the equity only becomes a factor upon a liquidity event such as a merger, sale or IPO, so you need to consider if any of those outcomes are likely. then you need to consider how much additional funding rounds there will be, 2% dilutes quickly as more and bigger players come in.

next you also need to think about the debt investors who get paid first, then the preferred stock investors – only after these two groups are paid in full, does anyone else get paid.

and preferred stock guys get additional upsides, like they could build in a clause that means irrespective of the outcome they get paid 2x their principal investment before anyone else gets paid. – its very real that a founder can be left with (exageration) nothing as a result.

now, even after all that, companies can play dirty tricks.

i’m sharing my own first had trauma now –

in my first company i had 5% – 1 year earn out on merger, i got to 9 months and ended up quitting because the environment was toxic, as a result, i got zero. the buying company was deliberately making life unbearable so employees would quit and leave their shares on the table. only the founder and 1 employee got their shares paid up.


in another company, i had 3%, first, the founder negotiated a merger were all of our equity which we had fully vested (except hers) was converted into share options of the new company, meaning we had to re-vest everything that we had already earned. then because the share options arent shares, once we earned them, we would have to pay for them to own them… then i was laid off, i ended up with less than a fraction of my originals equity, in the form of share options that i didt buy, meaning, again, i got zilch.


moral of the story, unless theres a clear exit on the horizon and you have some knowledge and influence on the cap table, treat equity as nice to have ‘maybe-bonus’ if you have no loyalties to the company and do see a long term life there, take bigger salary or bonus instead.

I’m being offered a position at a startup as an early hire. Does this deal sound good?
byu/lildaemon instartups

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