Ask HN: What's the fair amount of equity for a VP of Engineering in a startup?

6 points by trumbo 15 years ago | 5 comments

I am offered a position in a medical technology startup in exchange for 5% of equity. Is this a fair amount?

Are there any points of reference on how to make this evaluation?

brk 15 years ago |

Will you add more than 5% of value to the company? What do other execs have? Is it late stage, or early stage?

5% seems somewhere between about right and a little low, depending on the factors above ( plus others).

Also, step back and think about the big picture. A typical startup will have a CEO, VP of Engineering, VP of Marketing, VP of Sales, CFO, VP of Biz Dev ( maybe not all of these in all cases). If they each got 5%, that's 30% right there, which is quite frankly probably high, depending on the funding.

trumbo 15 years ago | |

It's fairly early stage. The project was initiated 6 months ago, but it's not funded yet. They are still working on building a working product. The website will be 1/3 of the overall product strategy.

The titles are meaningless at this point because I am also doing marketing and strategy. What I am told is they want to work out an equity strategy based on milestones I deliver. The first milestone, they said, would be the entire website, fully integrated with the proprietary app they are building.

Is this reasonable? Especially considering that the site is an essential part of the product.

I heard elsewhere that an alternative is to use the "sweat equity" algorithm.

http://www.torquepowered.com/community/blogs/view/16191

But seeing as we are all working remotely, it'd be hard to ensure that everyone is working fulltime on this project.

brk 15 years ago | | |

This is just off the cuff, but based on having a fair bit of experience in things like this...

What you're describing doesn't sound like the beginnings of a real solid company. IMO, what you're most going to get out of this is experience and resume fodder (which will likely be highly valuable in the future).

EVERYTHING is always negotiable. Rather than put up a shit fit up front, it's probably best to take the 5% and start plugging away. You could push and argue for more, but it's more than likely you'd be spending time arguing for a larger stake of nothing (not trying to be negative), especially if you're only being offered common shares anyway with no preferences.

IF the thing actually gets legs, than a large part of it will be due to your efforts, and you won't have any problems arguing for a second grant during the next funding rounds (which would pretty much obliterate any grants you get at this stage anyway).

seasoup 15 years ago |

Here is Aaron Patzers (founder of Mint.com) take on things.

http://techcrunch.com/2009/10/08/startups-101-the-complete-m...