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theontho/startup-equity-models.md

Last active November 15, 2016 01:03
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What I would do as an employee friendly startup equity model
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startup-equity-models.md

An employee friendly startup equity model

Before Funding & Valuation:

Low strike price with pre-exercise. Exercising your stock grant should be cost under %1 of salary.

After Funding & Valuation:

Company should pay the tax to give equity directly to employees with an X-year vesting schedule.

Once it starts becomming too expensive for the company:

Too expensive being $10-30k in taxes? You do X-year vesting liquidity-trigger RSUs, long lasting stock options or some combo of the two.

During the run of the company

Estimate if the best case scenario of the company would be better than working at FaceGooSoft financially. If not then it is probably not a good idea to work at that startup, since you will never meet the level of working at a good bigcorp. This will effect the turnover of the corp.

Challenges

Investor and co-founder buy in at start and future rounds. Ex:

You have no idea how hard it’s been to try something different. Even tried to get a three year vest for my employees, because I think four years is a bullshit norm, and lawyers mocked me for 15 minutes. Said it would make my company uninvestable. Source

Some references:

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