I'm not particularly motivated by money but this feels like something I should ensure that I'm doing myself justice.<p>I dropped out of University after first year and took pretty much the first job I liked the sound of that would pay me to code. It's been a great year and I wouldn't trade it for the world. I was the first technical hire at the company working with an external agency. Fast forward 10-12 months, I'm now an experienced Junior Dev. I'm currently working for £18k p/a. I've been interviewing at a couple of other companies and have had been quoted £26-32k and with a hard offer of £28k.<p>We're about to go for a funding round with a valuation of ~£7m. My bosses have informally agreed to better the £28k offer. I really like the idea of a minor equity stake. I was thinking somewhere between 0.125% and 1%. This feels like a big range. I don't want to come off like I don't understand the value of the potential equity stake.<p>After the funding i'll (hypothetically anyways) be working under an experienced CTO (new hire) with a quite substantial amount of responsibility.<p>I really appreciate any advice HN :)
Personally, I think negotiating for equity in terms of percentages is a mistake. The better way to do it is in terms of financial outcome.<p>You make X dollars in salary every year. You model the equity as a lump-sum bonus paid after 4 years (divide the liquid value of the options by 4, mentally applying as a deferred bonus for each vesting year).<p>To make that happen, you ask management for some outcome scenarios --- a "low", "medium", and "high" outcome, for instance --- that values the grant you're getting.<p>ie: "If we're acquired for $50MM, your options would be worth $Y". You make $X/yr, so, if the company is acquired, you'd effectively have made $X+($Y/4)/yr. Are you happy with that number? Then agree.<p>To dig into the low/med/high scenario, two helpful anchor numbers: first, the company's valuation at its last round (if the medium option 20x's valuation, that's, you know, worth knowing), and second (and I think more important) the multiple of trailing revenue that represents. In other words: in the "medium" outcome, how much revenue do your employers propose the company to have done in the preceding year, and what multiple does that imply for the valuation?<p>These are easy numbers to get your head around, implicitly capture the percentage of the company you're getting without making that the terrain you're negotiating over, and (most importantly) forces your employer to be clear about where the numbers are coming from and how the business will actually work.<p>The other way to do this is just to value equity at $0.
Practically speaking non-controlling non-preferred equity of a private company is worth only whatever value those higher up the food chain assign it out of goodwill. Controlling interests can structure liquidation largely however they want...e.g. they can sell to themselves at a nominal price or they can sell their stock into a round and buy a Ferrari. Hollywood accounting happens outside of Hollywood.<p>There's nothing to be gained by forcing your way into equity unless you are funding. You're not and recognition that there are sound business reasons for a negative response to a request for equity is not a sign of lacking sophistication.<p>If it's on the table take it. If it's not figuring out the business reasons why is immensely valuable.<p>Good luck.
How much of the value of the company is tied up in it's technology?<p>Your leverage at the moment is, if you decided to get another job, you would walk away taking all knowledge of the current system with you. Imagine you quit, and something went wrong the next day - how long would it take them to fix it?<p>I think your boss did you a huge favor, taking a risk on you this first year. Now you are no longer an unproved dropout, he owes you a real wage. Keep both of those in mind.
Lots of people advise job hunters to be skeptical of counter-offers. For example:<p><a href="http://corcodilos.com/blog/7874/should-i-take-a-big-counter-offer" rel="nofollow">http://corcodilos.com/blog/7874/should-i-take-a-big-counter-...</a><p>The job offers you got suggest that your current employer has been happily underpaying you by 50% of your market value.<p>Also, you're comparing a "hard offer of £28k" with "<i>informally agreed</i> to better the £28k offer". Don't turn down the hard offer until you've gotten a real commitment. And you'd need to get that commitment before the £28k offer expires.
A lot of the comments here tells you not to get taken advantage of (financially) and how to maximise your worth etc. I don't think that's wrong per se, but I also think that may be better advise for someone a bit further in their career than you are. Where you are, I would say you should maximise for learning. That means getting to work with experienced people who are willing to teach you. By all means, make sure you get a fair salary, but make it a secondary priority when deciding what to do.<p>Regarding equity - Certainly ask for some amount of equity. That could never reflect bad on you as it signals a commitment to the company on your end. Keep in mind though that equity is a fairly long-term view. At 19, a 4-year vesting is eons away. There's a good chance you'll never turn those options into anything material.
1% is £70K, albeit illiquid that still sounds like a lot of money. If they better your £28K salary it looks like £100K (of course salary is real and ongoing whereas equity is a single NPV). Is there a vesting schedule?<p>I'd say you need to think about how much you like working there, and your chances of finding something better. The market does seem pretty buoyant, could be well worth it to talk to more people.
28k outside of london is good. If they are getting funding then they are probably also scaling up, you want to get on the leading edge of that if you can. Career wise that might be worth more than equity.<p>Equity is a double edged sword, sure you get extra value but you are also tied to the company. When things are going great you don't want to leave and when things do sour then you cant because you just lost money and may feel a moral pressure.<p>28k is also a good figure as it will springboard you into all kinds of other job roles (because recruiters only look at previous salary). my salary jumps were similar in the beginning.
How many employees do they have? The less the more likely you are to negotiate a good stake. I don't think it really makes sense to apply financial calculations at this stage. You might be underestimating the amount of equity you can get.<p>What I'd do is keep the table open - make them hire/pay you for a month or two, then negotiate. You can probably get way more if you develop a good relationship.<p>EDIT:sorry, sounds like you already work there<p>If they're <=5 people don't be afraid to say 5 or even 10%.