Index Ventures, a venture capital firm, publishes founder guides on stock options, hiring, US expansion, and its investments.
HN commenters recommend its Rewarding Talent equity guide and calculator, and link its writeup on investing in Temporal.
Went through my Pinboard to extract all these:
- https://797capital.com/
- https://www.indexventures.com/
- https://www.sparkcapital.com/
- https://www.hcp.com/
- https://hvflabs.com/
- https://www.republiccapital.co/
- https://plus.vc/
- https://www.rarebreed.vc/
- https://www.dragonfly.xyz/
- https://macventurecapital.com/
- https://parafi.com/
- https://www.chingona.ventures/
- https://www.plexocap.com/
- https://lowercarboncapital.com/
- https://www.blckvc.org/
- https://www.gsr.io/
- https://rbf.capital/
- https://www.allraise.org/
- https://betaworksventures.com/
- https://www.gfrfund.com/
- https://www.hustlefund.vc/
- https://www.atelierventures.co/
- https://www.thetwentyminutevc.com/
- https://www.nfx.com/
- https://645ventures.com/
- https://backstagecapital.com/
- https://panteracapital.com/firm/
- https://femalefoundersfund.com/
- https://susaventures.com/
- https://atomic.vc/
- https://homebrew.co/
- https://www.cowboy.vc/
- https://foundersfund.com/
- https://www.kaporcapital.com/
- https://www.felicis.com/
- https://www.cleocap.com/
- https://www.ggvc.com/
- https://www.haystack.vc/
- https://www.menlovc.com/
- https://www.battery.com/
- https://www.nea.com/
- https://www.greycroft.com/
- https://group.softbank/
- https://twosigmaventures.com/
- https://www.redpoint.com/
- https://www.angellist.com/
- https://luxcapital.com/
- https://lsvp.com/
- https://www.bvp.com/
- https://upfront.com/
-…
The best resource on equity: https://www.holloway.com/g/equity-compensation
Earlier version on GitHub: https://github.com/jlevy/og-equity-compensation
Also look at the Index Ventures link and calculator:
- https://www.indexventures.com/rewardingtalent/calculating-initial-grants-at-seed
- https://www.indexventures.com/optionplan
From your question and knowing nothing else, I assumed it was probably low - but it depended primarily on salary and total compensation (is it market rate for your friend? How far off?).
From other answers (the company's fair market value is $30- $70 million vs $0 or unknown, the salary is slightly under market rate), it depends on the difference between your friend's total compensation here and other offers (or realistic other offers they theoretically could get).
I'd ask for more than the difference between this start up's total comp and other offers. Why? Expected value and risk. Get a reasonable risk adjusted amount given liquidity and likelihood it will ultimately be worth $0, $1,000, or even $10,000 (good chance it's in the 90-98% range, and if the company wasn't already worth something it'd be closer to 99%).
It's probably in the ballpark of fair, but not quite there for your friend.
It's not that uncommon to keep the "CTO" title and not be the primary manager of the engineering organization. There are all kinds of things you can do with the org chart. If I recall correctly, Clickhouse works this way.
The company's cofounders comprise three people [1]:
* Aaron, a sales-oriented CEO from Elastic and Salesforce
* Alexey, the original Clickhouse developer, as CTO
* Yury, an experienced engineering executive from Google/Netflix as "President"
An excerpt from the launch announcement [2]:
> While negotiations were still ongoing, Katz decided they needed a third co-founder. “I kept thinking, if I could get a third co-founder to run product and engineering, and if I could find someone with the same level of experience building distributed systems on open-source that I have on go-to-market, it could be a really compelling combination,” Katz says.
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[1] https://clickhouse.com/company/our-story
[2] https://www.indexventures.com/perspectives/the-fast-and-the-furious-how-clickhouse-the-worlds-fastest-open-source-database-is-creating-the-first-real-time-data-warehouse/
This letter is timed with our Series B announcement today! We just did a 1hr livestream here giving context and answering Q&A: https://www.youtube.com/watch?v=E40KwlxZJFI
Additional coverage for more info:
- https://www.geekwire.com/2022/temporal-is-a-unicorn-developer-productivity-startup-lands-120m-at-1-5b-valuation/
- https://www.theregister.com/2022/02/16/temporal_103m_funding/
- https://siliconangle.com/2022/02/16/temporal-raises-103-million-accelerate-development-stateful-cloud-applications/
- https://dailyuknews.com/tech/temporal-raises-103m-in-series-b-funding/
- https://finance.yahoo.com/news/temporal-io-raises-103-million-170000698.html
- https://www.computerweekly.com/blog/CW-Developer-Network/Temporal-calls-time-on-cloud-app-state-management
- https://www.indexventures.com/perspectives/everything-is-a-workflow-our-investment-in-temporal/
Most startups are open to trading cash for equity if you ask. Many even offer it explicitly. Investors also encourage it, e.g. see Index's Rewarding Talent guide: https://www.indexventures.com/rewarding-talent/balancing-cash-and-equity.
When I make someone an offer, I give them a spreadsheet where they can plug in different salaries and equity stakes to see outcomes based on future funding events, valuations, and exit scenarios. Without exception the people who've leaned into equity have turned out to be the best performers and ended up with higher salaries anyway, but a majority favor cash up front.
This overall seems like a very useful resource for EU-based founders.
That said, their suggestion of "Seriously consider back-loaded vesting schedules" is employee unfriendly (https://www.indexventures.com/blog/rewarding-talent-quick-guide, tip 5)
In particular the idea of a 10/20/30/40 vesting schedule is non-standard, except maybe at places like Amazon. IMHO, if you want to retain people longer, use additional refresh grants instead.