I have 6 years experience. My current base/fixed is 60 LPA. (I also got a 5 lakh bonus and 5 lakh of my ESOPs vested this year making my total vested about 30 lakh. So the total comp is 70).
I'm being offered a senior engineer position in an early stage startup (as part of the founding engineer team). They haven't given an offer yet.
Being early stage, the emphasis will most likely be on ESOPs. How do I evaluate this and set my expectations? (If I were to switch to a mature company, I believe the hikes usually are between 15-20%? How does this work for early stage startups?)
I would typically expect a lower cash component and 0.5-1% of their ESOP pool at your experience.
Thats what you should negotiate for.
If you decide to move to an early stage startup that is
Thank you. Is there a reason for them to not disclose the ESOP pool size or how many ESOPs I'd get etc? I'm only being told some current INR value of the ESOPs but not the number of total ESOPs issued etc. I tried asking this but I only got "you'll get x lakh worth of ESOPs"
If you see the startup being successful, u should join even with < 5% hike in base. Ask for more ESOPs they should generate much more wealth for u compared to salary (if the startup succeeds or raises funds where u can get a good exit that is)
Would you accept if the offer was 55 lakh with 40 in ESOPs?
I would be more inclined towards saying yes. Depends on
You already have 6 years of experience with a great salary.
Why run after ESOPs? When you negotiate equity, there’s a huge difference between these two
I would shoot for getting 1 percent equity in the company
Could you elaborate more here? Difference in 20L of ESOPs at a unicorn valuing in Bs and 20L worth of equity at an early age startup?
valuation multiple (factor of multiplication between 2 rounds of funding) in early stage is higher. It is 5-8x for seed to A If OP gets 50Lakh of esop at seed valuation, it will instantly become 2.5cr if series A is secured at 5x valuation of seed valuation.
This multiple keeps decreasing strongly with every stage of funding.
Don't go unless you have a personal runaway of 2 years.
What do you mean? It's not going to be ESOP only though. There's going to be a cash component as well (they have a round of funding already. Around 8 million). I'm just trying to understand what's realistic to ask as my cash component
If they already 8 million dollar in the bank, I think you can have a better cash component.
Man, sometimes I feel I am missing out on a lot by being in an MNC. I feel like I should also join the bandwagon and join a startup.
Can I ask your tech stack? Just being curious you see.
I usually work with Go a lot since I do mostly backend at work. I'm good at picking up new tech though. I have worked extensively with Clojure as well. And I built a small startup in my free time with SvelteKit (first fullstack project) which I sold after 2 months.
I was in a similar situation. What worked for me though was an open conversation. Since its a early startup and you should be going in as a core member of a team.
I would suggest to take a normal hike on base and take esops with a conversation of bumping the esop percentage one year down or just before the next funding. Good founders should be able to do it if you are really adding the value and till then you would have really known if the company would work or how good fit the company is for your journey.
Esops will obviously generate great wealth but that is on papers untill they let you dilute. You should ask that as well how comfortable would they be of you want to dilute a portion in upcoming rounds .
I would also consider the role and involvement as working in a early stage startup and scaling might teach you a lot of things about entrepreneurship if you decide to choose that later in life.
70 base. Rest esops. Esops will be paper money for some years
Not all ESOPs are equal. This is a really good framework to see if the ESOPs you are getting are good - https://twitter.com/BeingPractical/status/1363352214559891456
If I were you I'd fo focus only on cash component. ESOP's as lottery.
For making wealth I'd look to buy equity or MF from the listed universe and give that at minimum 10-15 years.
Listed universe is liquid as well as you get more realistic valuation rather than paper money and untrusted valuation.
Even after startup gets listed the price can go down due to bloated valuation of private market. Have seen companies go down to 1/10th of valuation of IPO valuation after getting listed within 6 months during which you might be restricted from selling due to regulatory restrictions.
I'd not look to increase my lottery component but increase cash component that gives me better chance of creating wealth.
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