How do you value startup equity compensation?
To determine the current value of a share (called the fair market value, or FMV), you divide the valuation by the number of shares outstanding. For example, if a company is valued at $1 million and it has 100,000 shares outstanding, the FMV of a share is $10.
What is the typical equity compensation for a startup CEO?
The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. This has long been an acceptable salary range depending on the cost of living adjustments and the value of the business, and as long as the fledgling business isn’t truly desperate for cash.
What is a good valuation for a startup?
Valuation by Stage
| Estimated Company Value | Stage of Development |
|---|---|
| $1 million – $2 million | Has a final product or technology prototype |
| $2 million – $5 million | Has strategic alliances or partners, or signs of a customer base |
| $5 million and up | Has clear signs of revenue growth and obvious pathway to profitability |
How much equity should you give your employees?
Employee option pools can range from 5\% to 30\% of a startup’s equity, according to Carta data. Steinberg recommends establishing a pool of about 10\% for early key hires and 10\% for future employees. But relying on rules of thumb alone can be dangerous, as every company has different cash and talent requirements.
How much equity should CEO get?
For example, Founders / CEOs at companies that have raised Over 30M typically get between 50 and 5M+ shares. However, smaller companies that have raised Under 1M are more generous with their stock compensation as it ranges between 5 and 60\%+ for Founders / CEOs.
How much do you get paid at a startup?
Startup Salary
| Annual Salary | Hourly Wage | |
|---|---|---|
| Top Earners | $148,000 | $71 |
| 75th Percentile | $106,500 | $51 |
| Average | $80,958 | $39 |
| 25th Percentile | $43,000 | $21 |
How is share price of startup calculated?
This is simply a function of the formula: per share price = pre-money valuation / total outstanding shares.
How much employee equity should you offer your startup’s developers?
Leo Polovets of Susa Ventures suggests offering between 1\% and 2\% for a lead developer, based on data from Silicon Valley early-stage startups. Fred Wilson of Union Square ventures has posted an entire free, online class where he goes into great detail about structuring employee equity, which is definitely worth watching. What about advisors?
How much equity do engineers at rewardspay give to each other?
When Shukla was building her team at RewardsPay, she gave the earliest engineers joining her team an equity share of between .5\% and 1\%, depending on both experience and a person’s salary requirements.
Should equity compensation for early employees be equivalent to market rate?
In other words, the loss of compensation for the early employee as compared to market rate should be viewed as equivalent to the equity for that same dollar amount from an investor. Logically, that’s correct, but I personally would put a risk premium on equity compensation.
How much equity should you give your first hires?
Getting someone to join your dream before it is much of anything is an art not a science. And the amount of equity you need to grant to accomplish these hires is also an art and most certainly not a science. However, a rule of thumb for those first few hires is that you will be granting them in terms of points of equity (ie 1\%, 2\%, 5\%, 10\%).