On the outset if you think the startup would do well, then I would suggest to join even at a 4% rate - the reason being that its better to join a more promising startup at a below market compensation rather than the other way round.
One way of coming with a good figure is as follows:
Assuming your market salary is x /mnth and the founders is y /mnt. Also, assuming that you get funding in about an year. Then finally based on the assumption that the startup equity is a function of hte risk that you take, then each founders total investment comes to:
12y + 18y
and your investment comes to:
12x
So essentially your stake in the company should be around
12x / 3*(12y + 18y) + 12x
Also, there is no basis for your stake to not get diluted and incase the startup goes for multiple rounds 4% might looks like a very high figure which the founders might end up not being very comfortable with.I would suggest, and for other reasons also, that you might consider negotiating a bigger stake and accept dilution.
Yeah, I am trying to negotiate a bigger stake but with dilution.
None of the founders have been working on this full time over the last 18 months, I would say about 50% of their time, it is only now that everyone is coming on board full time. We have lots of customers knocking on the door for the product which is down to them. I am being told the figures being presented to VCs indicate the company may be worth about £6m today, though we have no contracts in place yet.
One way of coming with a good figure is as follows:
Assuming your market salary is x /mnth and the founders is y /mnt. Also, assuming that you get funding in about an year. Then finally based on the assumption that the startup equity is a function of hte risk that you take, then each founders total investment comes to:
12y + 18y
and your investment comes to:
12x
So essentially your stake in the company should be around
12x / 3*(12y + 18y) + 12x
Also, there is no basis for your stake to not get diluted and incase the startup goes for multiple rounds 4% might looks like a very high figure which the founders might end up not being very comfortable with.I would suggest, and for other reasons also, that you might consider negotiating a bigger stake and accept dilution.