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I was just asked about a particular startup situation (seed stage, CMO hire, non-founder) and particularly what compensation and equity is appropriate. Seed Stage Compensation What are typical compensation numbers?
I was asked by a reader how much equity he should give out to early employees and to service providers in a very early stage startup. The first few people into a startup are on a spectrum of founder vs. early employee. For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula.
I’m not sure I really even need to write this at length because Nivi absolutely nailed the topic in his article “ The OptionPool Shuffle.&#. When I went to raise money in 2006 I thought I knew every term in a term sheet but somehow I still got a bit duped by the optionpool shuffle. No optionpool shuffle.
That’s what a couple of my friends – engineers at Google and Bloomberg who have been following the rise of startup culture with intrigue – told me recently. They were referring to non-founder engineers, most commonly the first hire for technology businesses. Every time a startup raises capital, all common shareholders are diluted.
How to Divide Equity to Startup Founders, Advisors, and Employees. Percent of the outstanding optionpool: meaningless. Strike price of options: meaningless. Are there principles that you live by that you’ve implemented in your startup that have worked really well? Marketing Intern. Office Space. Five years?
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