What are the ways in which a startup employee can protect equity?

The first thing to remember is this: until your company goes public or is bought out (under certain circumstances) your equity does not mean much. If you work for a company that you truly believe in and enjoy the work, then this may not matter. However, if you are in your role solely for the pay/equity, then it may be time to move on.

Receiving equity, especially early on in a startup, is a valuable tool for an employer to use to woo potential employees. While a startup may not have the funds available to offer a competitive salary, adding equity can be powerful. Knowing that you have a stake in the enterprise often results in better work by employees.

So that really is all that you can do to protect any equity that you have been granted. Work hard. Your efforts will likely result in a higher number of shares being moved your way. Plus, your work may help to elevate the company – which may eventually result in a public offering.

Things to remember:

Vesting: Even if your startup is or does go public, you must remember that you are held to the vesting schedule outlined in your employment agreement.

Think from your boss’s perspective: It can be useful to understand both sides of the equation. Here is a quick article on how much equity to give, which can help you to gage what is a good deal for you.

If you’d like some help discussing the specifics of your equity with a knowledgeable startup attorney, feel free to reach out to LawTrades.