Monday, December 12, 2016

How to negociate your compensation package with a startup?


Its quite simple but most startup will make it look complex to make a better deal then you.




  1. First, know your market value (ex: 100K)
  2. Second, get the startup base salary offer (ex: 60K)
  3. Third, estimate the unpaid value: market value - base salary = update value (100-60=40K); usually the unpaid value is paid in stock with a premium
  4. Forth, get the last valuation of the company & number of shares total + double/tripple dipping clause details.
  5. Evaluate the risk factor to get the unpaid value in stock. Basically the stock option premium to ask.  
    1. Startup phase/maturity level (risk factor to apply)
      1. MVP = fucken risky, a big factor is required (ex: 100)
      2. Market Fit exploration = Fucken risky so a big factor too (50-100)
      3. Market validation phase, time to scale = 2-5
      4. Quality of the investor and network they bring = 2-100 (vary a lot)
      5. Market (hype or ...) = 2-10K
    2. Strategic location = 2-1000 (vary a lot)
    3. Type of startup
      1. Type of startup = unicorn (big factor), etc.  1-100
      2. Business type, B2B or B2C : 1-100
      3. Type of revenue (recurrent, retension
      4. Data driven = 1; non-data driven (get out)
      5. Working culture
      6. Collaboration and communication culture
    4. Management team
      1. Management team, advisor experience in place = 2-1000
      2. Team quality: 2-1K
      3. CEO focus = 2-1M
      4. Management Mission and Vision clarity
    5. Financing
      1. Delay before next founding required -> 2-1000
    6. Your value
      1. Role type = Tech has more value
      2. How rare is your skill = 1 to 100
  6. Evaluate the number of share you should claim (40k*25 = 1M; current valuation = 10M; stock = 10% ownership)

As you can see, its quite simple, its basic math.