Hi all,<p>I’ll soon be joining a small 1yo startup as the CTO and the CEO suggested the following equity arrangement:<p>- 3y vesting period, 3% per year
- If I leave the company on the 4th year, the percentage will start reducing linearly until the 10th year, going down to a minimum of 5% (unless there is an exit event).<p>Keep in mind the following:<p>- We’re both first-timers in these roles (CEO / CTO).
- He’s not coming from the business world.
- We’ve known each other since forever and he’s not trying to screw me over; we are honest with each other on what we do or don’t know and this is definitely something we are not knowledgeable about. His reasoning is that the work between year 4 and 10 may be way more significant than the one we’ll do together in the next 3 years and that 9% is too generous to be given away in 3 years.<p>1. Is this pattern something you’ve heard before? If yes, how is this type of arrangement called?
2. Does it make sense? Any questions I should raise with him?<p>Thank you in advance.
<p><pre><code> > We’ve known each other since forever and he’s not trying to screw me over
</code></pre>
ROTFL; if your mindset is that your cofounders might be "too generous" you are already being screwed.<p>These terms seem to presume that you should stay for ten years or more because 9% of the company in 3 years will be worth less than 5% in ten years, i.e. an extremely successful growth pattern.<p>This is not only more recklessly optimistic than usual: it's unfair to you because you are giving your shares to your cofounders in exchange for, apparently, nothing.