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I am going to be joining a startup as an employee in the Midwest, USA. I will be joining as the number 2 employee, but I doubt that he considers me a founder, as he has already been in business for 1.5 years.

The company is a boot-strapped software development consulting company that is working on a product on the side. He has stated that he wants his employees to have some ownership.

When I join the company, what percentage can I expect in an equity grant?

I do not yet know what my title will be but I consider myself a talented software developer that has the potential to grow into a more well-rounded, business-savvy leader. Any incite would be extremely helpful as I have never worked at a startup before.

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2 Answers

I came across this article on stock options for early employees. It gives some perspective which you can use as one reference point.

Given that it is early you may want to negotiate your equity allocation based on specific milestones and goals. This could motivate the founder to actually measure as to how you would be contributing to the firm and what would be adequate compensation for that.

Hope that helps.

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+1 again! I'm liking your answers man... :-) – Jason Oct 11 '09 at 16:46
Thank you very much. Am enjoying reading your responses as well. – Usman Sheikh Oct 11 '09 at 18:25

In my experience the amount of stock you get is directly related to how much risk you are taking and what you are contributing to the company.

For example, Angels/VCs and Founders take the most risk because they are typically contributing cold hard cash and founders may not be paid for quite some time. I have been working on my startup for over a year without any pay.

Are you going to be working full time? Are you earning a normal salary? Is so, then you need to ask yourself what "risk" are you taking? If the answer is “very little,” then expect to get very little stock.

If you want more stock, then perhaps you can forego your salary for six months in return for a lot more equity. If one of my engineers offered that I would jump at it. The above referenced link seems overly generous. I would think that early employees are getting 1/3 to ½ of what is listed there. I’d love to hear from other people on this.

Rick

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