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What is the difference between Series A, Series B and Series C investment for a startup? How does this affect salary and/or equity expectations if I am looking to join a startup in a vice-presential/co-founder role at each of these different stages of investment? |
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The letters indicate subsequent rounds of financing. e.g.,:
The company should hopefully be more successful and have a higher valuation at each round of funding. At early stages of funding, salaries are often lower for the need to preserve cash. At later stages, salaries become smaller in relation to the total operation of the company so you can expect a higher or market salary. At early stages of funding you can expect a higher percentage of equity than at later stages, but the percentages can vary greatly depending on particular circumstances. For your situation, maybe something like 10% at Angel, 2% at series A, 1% at series B, etc., but again these could very greatly. |
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Series A, Series B, Series C, etc. are all "classes" of stock. In this case, Series A Preferred, Series B Preferred, etc. Common stock is also a class of stock. The difference between these is that each class of stock that a Corporation has will have different rights, control mechanisms, liquidation preferences and price (both initial purchase price and current value assuming liquidation preferences are part of the corporate structure). The number of different series of preferred stock raised will not have a direct impact on how much equity or compensation you should expect to receive per se. The reason is that one company could raise a Series A, B and C round but only have total invested capital of $5 million, while another could raise $50 million across three rounds. Obviously the two situations will have significant differences in terms of % of equity being handed out to new employees, and usually in terms of compensation as well. All that said, here is a VERY high level (meaning likely wrong for many situations) guideline for you. Let's cover "Co-Founder" first - You would only join a company as a co-founder at the formation of the business, which is before the Series A financing. The amount of equity a co-founder receives depends on a number of factors. Vice President - If you join as a Vice President (reporting to the CEO as opposed to reporting to another VP) of a start-up, here are general guidelines for salary and equity. Again, these are general, and vary by role (Marketing, Sales, etc.) Series A - Cash Compensation - $140k to 200k. Equity - .75% to 1.75% Series B - Cash Compensation - $160k to 230k. Equity - .50% to 1.25% Series C - Cash Compensation - $180k to 260k. Equity - .30% to 1.00% Again, these are really general guidelines as it is impossible to accurately answer the question without a lot more specific details, but hopefully it helps. Feel free to comment on this answer, ping us on Twitter (@capgenius) or on our site if you have follow-up questions. |
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