- <2007 Nov> - company founded (with idea "A") by 1 founder, who's an engineering graduate, with no job experience but lot's of entrepreneural spirit
- <2008 year> - Idea "A" does well in providing the service and makes a good amount of money with only 4 employees (incl founder)
- <2008 Nov> - a co-founder joins with 8% equity and 30% pay cut from his market salary. His objective was to scale up the model and make it tech oriented. But he fails and leaves the company in a few months to go back to his job.
- <2009 Mar> - I join with a 60% pay cut from my market salary(no equity) only because i wanted to startup and found faith in the founder. Though im not a techie, but i have almost 4 years of work/job experience and i am good with ideas, processes, team building/people mgmt, relationships, sales, Bizdev, PR, networking, etc.
- <2009 Oct> - After 6 months, I request a raise and a share of equity which was promised to me before i joined. Following this, my salary is increased but remains 20% lower than the market standard at that time + 8% equity.
- <2009 Nov> - i come up with a business idea ("B"), which is unique to our industry but still works towards the same objective which our already established business (idea "A") has been in. However, my idea ("B") is highly scalable (from the looks of it) and taps into a bigger market, which our earlier business (idea "A") wouldn't have been able to.
note: now the revenues (combined by "A" and "B" ideas) of the company have increased marginally (by about 40-50% from 2008 figures) but nothing extra ordinary yet - we've been profitable since day 1. Our team has increased from 3 to 13 + 2 of us. Though, the ideai ("B") that i came up with, is still not making lot of money - it's enough to pay 13 employees' salary and office rent. While our established business' revenues are used to pump us ahead.
- <2010 Sept> - I'm not comfortable with my salary (but can manage it somehow since we're still in startup mode) BUT more importantly the equity share offered to me, I feel, is unfair if compared to the value and contribution i bring in terms of experience/expertise/efforts/dedication.
Founders' argument is
a) im taking a higher pay than him. (let's say if im taking 3x then he's taking a lil above 1x)
b) he needs to retain equity for VCs (in future) or other co-founders we might need for the technology scale up in future.
c) if i want higher equity, i'll have to take a major salary cut
My argument is
a) my involvement in the company + risk + pay cut + business idea + unflinching dedication (work hours) = much more value for the company (more than 8-10% for sure).
My confusion/questions are:
1) How much is a fair share in such a situation?
2) Is there a way/formula to calculate a number/avg?
i know this might be too long a post to spend time on for many of you - but each answer will be highly appreciated, and i'll be grateful to you for some good advice.