What is a fair equity/salary amount to offer one of the first key employees of a startup pre-funding?

What is a fair equity/salary amount to offer one of the first key employees of a startup pre-funding? by @R44D

Answer by Raad Ahmed:

Is the offer fair?

Maybe.

But, it’s really not about that. Business is rarely about what is fair and is more about what is viable. It’s about whether or not this type of deal will attract the kind of employee you are looking for.

It’s hard to sell the idea that your company has value at the pre-funding phase, but if you have some sort of analytics that can back up that projection then you should definitely share that information with the prospective employee. Because you are asking someone to take a chance and spend a few months (at least) of their life without pay, then your best bet is to be absolutely transparent and make them believe that your company is so incredibly awesome that they would be a fool to miss out on the chance to grow with it.

If you’ve never heard the story about Pandora’s co-founder Tim Westergren, then you should definitely look it up. He convinced some 50 employees to stay on board with no pay for 2 years!

How’d he do it? By being real about the challenges and inspiring them to believe in the vision of the company. It’s no easy feat, but people are drawn to honesty and being apart of something bigger than themselves.

Startups can come with a lot of challenges—especially early on. Interested in learning more about equity, salaries and all the other stuff that comes with building a business Check out my free eBook:How to Start a Business: An Entrepreneur’s Legal Guide.

What is a fair equity/salary amount to offer one of the first key employees of a startup pre-funding?

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