Ask HN: Best way to offer equity to someone joining early stage startup?
1 comments
Yes, almost all employee (and founder!) shares are vested over a period of time. Typically, shares are vested over 4 years, with a one year "cliff." This means if the employee (or founder) leaves before the one year has elapsed, they don't get any of their shares. Then, after this set "cliff" period has ended, they get some fraction of their total shares each month.
But based on your question, I'm guessing you haven't yet set up your own founder share structure yet? If so, that's probably the best thing to do first. Sites like Clerky.com can help a lot like this, and you can figure out how all the bits and pieces work together with a good amount of googling and persistence. Of course, if you have some money, talking to an attorney about this can really speed up the process and help make sure you don't make any obvious mistakes.
But based on your question, I'm guessing you haven't yet set up your own founder share structure yet? If so, that's probably the best thing to do first. Sites like Clerky.com can help a lot like this, and you can figure out how all the bits and pieces work together with a good amount of googling and persistence. Of course, if you have some money, talking to an attorney about this can really speed up the process and help make sure you don't make any obvious mistakes.
Thanks phillipn :)
I approached them originally about doing some work for me and me paying them for their time. After talking about the project they want to be involved long term, and they have offered to partner in exchange for a share of the company.
My concern is obviously how to make sure this is a priority project for them and that they only get the equity once they have 'earned' it so to speak.
I'm also concerned about just signing over X% out the gates and have been imagining some sort of agreement whereby they have a fixed amount available (let's say 5%) which they 'earn' over 5 years. e.g. 1% a year.
If we come to raise VC in the future (I guess crucially, in the first 5 years before they earned their full allocation) would this be an issue? I'd assume that the VC offer would want a certain % of the company, and then the remainder would be split between us two founders in the same ratio. e.g. 95/5
What's the best way to offer them equity then?
Is there any common setup for this kind of thing?
Any and all advice much appreciated.
Thanks HN :)