As a CRO of a fast growing SaaS series A startup with $3m ARR, how much equity should I ask?

There’s a bit of a rough Catch-22 in VP/C-level equity comp these days.

At least in the Bay Area, there has been a ton of inflation the past 3 years. Top CRO/VPS comp has gone way up, at least on an OTE basis. This can be tough to swing, but … if you are well funded, it may not really matter. Most of us aren’t well funded, but with the deluge of venture capital, and bigger-and-bigger venture rounds, paying a bit more cash may not be the end of the world if you have the cash.

And top candidates are also asking for a lot more equity. This is the tougher one. Because even with inflation, the equity pie still only adds up to 100%. VPs of Sales and CROs that “asked” for 1% a few years ago sometimes ask for 3%+ today. That may be fair, but the problem is, there just isn’t enough room on the cap table. It also sets you up for a potential dis-alignment with the board if you are given a way outsized grant.

So my real advice is sleep on it. The best outcome for VP level equity, or almost any equity, is often “125%”. I.e., 125% of what you are first offered. Ask for more. If you get a bit more, take it. That won’t burn any bridges or create any issues. Push back a second time though, and people remember. And if you “force” a company to make a huge grant they don’t want to make, you may be buying yourself nothing. Those grants vest over 4+ years, after all.

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Published on July 30, 2018

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