Progress: (Rough) app is built and being sold. Up to 70k ARR. Bootstrapped, but angels are knocking.
Me: Previous CTO of seed stage vc-backed startup
Their offer: 5-8% for CTO cofounder. Immediate (low) salary.
Does this sound about fair?
You'd be essentially Employee #1 with a fancier title (and more sway if they take the C in your title seriously). If the amount of equity is important to you, you should go start your own startup from scratch. But if you like and trust the founders, and are excited about what you would be doing, then the equity is just a bonus for being a key player in getting the company successfully to its next stage.
Here there’s nothing but hard work ahead.
To me, your compensation should reflect the future value you bring.
Not the sunk costs of the existing founders.
I mean 70k ARR is not indicative of a viable operation.
Angels knock on more doors than they pay to enter, if it takes your hiring to make the company viable, then 8% seems…
…well it seems like resentment of the idea of making you rich.
70k ARR is probably less than 0.5% of what an undiluted 8% would take to give you FU money at exit…and that 8% won’t be undiluted at 1400k ARR.
And all that’s if the major shareholders are trustworthy, the company is successful in a meaningful way, and you’re exceptionally lucky.
Sure Gates and Allen brought in Balmer for only 6%, but Microsoft’s problem was counting all the money and Balmer solved that nice to have problem…basically they made him a millionaire when they hired him.
Good luck.
Clearly you are not a cofounder. Sounds like you are getting a title in lieu of salary.
Also, as a "cofounder" they are going to work you hard (80-100 hours). I.e. this is not 9-5 job, so if you compare it to market rate you should see it as at least 1.5 position.
What is intermediate? Can you put in a contract the length of time of low salary. Also, what is low salary?
Also, who is going to create the product ? You ? Confounder A?
Note that VP of sales means nothing in startup. Specifically pre seed. I.e. there is nobody to manage and there is no sale infrastructure. So I am not sure what is the VP of sale role is? Sale of what?
I see a lot of red flags - Low MRR, VP of sales from the get go for an deep tech company, Low balling an engineer. etc.
Should probably be based on 4 to 5 year vest, but YC wouldn't let you join in SF if you are on less that 10%.