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Is this a fair equity package? 1% of company now with 9% vested over 4 years. If I leave or get fired at any time before exit, I leave with 1%.

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JASON LEMKIN

I really like most of this structure — for a “late” cofounder.

Being a true co-founder is a long term commitment. And it involved more buy-in, more ownership, than a pure VP.

This equity package is consistent with that. You are getting:

  • 1% now. This is basically a VP-level equity package, albeit a very good one, because it’s all vested up front. Let’s call that a Super VP level package them.
  • 9% more over 4 years. This gets you to 10%, which is true early-stage co-founder status; it’s a lot; but
  • If you leave before exit or really before the journey is “done”, you just get the 1%. I.e., you are “just” a Super VP. This is the right idea (if you check out, or don’t work out, you don’t get the ‘founder’ part of the package) … but a bit extreme to me.

I’d prefer a compromise, which is vesting the 9% over say 10 years with 2 year cliff for next 1%. This is sort of how VC firms do it. That way, you get 1% up front, another 1% at the end of Year 2, and then 8% more over the following years.

This incents you to go long like a true co-founder. Even if you weren’t there on Day 1.

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Published on December 3, 2017
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