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Bring Experts Into The Process Early
Pietro Invernizzi in Welcome to The Family. Maud Camus in Welcome to The Family. The guide to organizing an event for your startup. Vlad Oustinov in Welcome to The Family. Present your counter-offer. After reviewing their offer, if you have serious problems with any of the key terms, build a counter-offer that better reflects what it will take to get you on board.
When you set out to negotiate your equity compensation, schedule a meeting with the founders or other leaders in the company. Have the meeting face-to-face to discuss your offer rather than exchanging emails or texts.
Vesting (Or, How Long Until I Actually Get This Value?)
Start by explaining your understanding of the terms, and make sure that your understanding matches with what the people who crafted the offer intended to present to you. Prioritize equity over cash.
Since startups typically are strapped for cash, you won't get very far in negotiations insisting on more money. If having a substantial salary and other perks are important to you, taking a position in a startup probably isn't the best fit for you.
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Especially if the startup is in the early stages and hasn't yet reached all of its funding goals, you're much more likely to get somewhere in negotiations if you ask for more equity than if you ask for a higher salary. Consider that in some startups, the founders or company leaders with whom you're negotiating may have agreed to forego salaries. If the company is in the early stages, you may be able to negotiate salary increases when additional funding is raised or when the company's product starts generating revenue.
Limit your negotiating points to cash and equity compensation. When you present the company with your counter-offer, avoid getting stuck on issues that won't affect the bottom line. Haggling over other terms of your offer will only distract from what's really important and make negotiations take longer than they should. The company may choose to give you what you want on these minor points but refuse to budge on anything else. This could leave you no better off than when negotiations began. Keep in mind that fancy job titles or perks such as parking or gym memberships won't provide much long-term value.
Emphasize what you bring to the company. When you present your counter-offer, you can remind the company why they wanted you in the first place and what you bring to the table. It won't be in your best interest to make it personal or to talk about offers from established companies.
These people simply may not have the funds with which to compete. Decide whether to accept the offer. You should conclude negotiations with the company's second offer rather than coming back with a second counter-offer.
If the company responds to your counter with a second offer, you may want to have your accountant or attorney look it over. Be prepared, however, to make a final decision with or without their help. Keep in mind that even if you'd like to take your time to evaluate all the nuances of the offer, taking too much time can kill the deal.
Negotiating salary and equity with a startup company - Startup Daily
If you wait too long to respond, the company may make your decision for you by hiring someone else. Include your email address to get a message when this question is answered. Unless you know the founders of the company well, have a great deal of trust in them, and are passionate about the company and the product or service it's offering, be wary of taking a deal that offers you little or no cash compensation or requires you to pay the company money.
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How to value your equity offer (free startup equity calculator)
Written by:. Jennifer Mueller, JD. Co-authors: 3. Updated: March 29, Categories: Financial Stocks. Thanks to all authors for creating a page that has been read 14, times. Did this article help you? Yes No. Cookies make wikiHow better. By continuing to use our site, you agree to our cookie policy. Related Articles How to. Equity compensation in the context of pre-IPO startups is far trickier.
Employees sign onto such companies, of course, because they hope that their 0. Because many startups are really cash-strapped, they have a habit of paying out a big chunk of compensation in equity. And therein lies the dangerous opportunity: if you join the right company early enough, you could end up rich beyond your wildest dreams.
But if the startup collapses, all your equity is vaporized.