Startup equity – am I being lowballed?

Question

As a lead/staff engineer, I was recently offered 0.1% equity at a post Series A startup after working at it for almost a year. It's the 1st grant and vesting started at day 1.While on paper they say this grant could be worth $1m if startup is valued at $1b, it's still only 0.1% of the company and $50k at the last valuation.Strike price is really low but I am still wondering if I am being lowballed?

LordJim · Accepted Answer

I don't think you're necessarily being lowballed. 0.1% is a reasonable number for a hands-on engineer in series A. Keep in mind that startups typically have maybe 20% of their equity allocated as the pool for stock option grants, and they guard that very closely. They need to reserve possibly multiple % for early executive hires such as VP of engineering or head of sales as they grow.Also don't buy BS like "they say this grant could be worth $1m if startup is valued at $1b". Not only is there a small chance of them ever getting to a $1B valuation, you would mostly likely be diluted between now and then by additional funding rounds.

coderintherye · Answer

Probably, but what's your negotiation position?
If you believe management is amendable and just needs data, then pull data for typical equity grants at this stage to your equivalent position and present it to them.
If not amenable, then decide if you are prepared to walk away and then if so set an ultimatum for a market-rate grant.
Also, regarding "$1m if startup is valued at $1b, it's still only 0.1%" it's actually quite likely to get diluted by that point. You should ask them if the shares are non-dilutive or not (unlikely to be protected from dilution).

toomuchtodo · Answer

Reasonable grant for org stage and contributions. If you don&rsquo;t have better options immediately, thank them for the grant and move on until you decide you no longer enjoy the work or you find a better opportunity (comp + equity). Also, don&rsquo;t get hung up on it too much. It&rsquo;s just a lottery ticket.

anon84873628 · Answer

It seems like you _feel_ you are being lowballed. To know for sure we'd have to know how many other employees and how much you contribute, right?Were you not given equity when you started a year ago? Was it still Series A at that time?