Re:How to avoid start-up success? Not offering equity!
by zeph on Friday April 20, 2007 @09:29AM
(#15046)
If you look at it in really objective terms, what is a fair RoI for the paycut you take? Pick a number, if say you want a 5x return and expect to be there for 2 years, that's $200k you should bank after acquisition. if they go out at $10mil... then you want to have at least 2% equity.
Obviously, the longer you hang around, the lower the actual return you get for sacrificing the extra $20k/pa you could get elsewhere. If you wanted to take an even gloomier view, you could calculate the yield on investing $20k/pa, take into account consumer price indexes and any rising market rates. Oh and don't forget the potential for dilution.
Unless your employer is going out in many multiples of $10mil, it's probably better to take market rates elsewhere, and use the extra $20k to invest/bootstrap your own startup on the side :)
Obviously, the longer you hang around, the lower the actual return you get for sacrificing the extra $20k/pa you could get elsewhere. If you wanted to take an even gloomier view, you could calculate the yield on investing $20k/pa, take into account consumer price indexes and any rising market rates. Oh and don't forget the potential for dilution.
Unless your employer is going out in many multiples of $10mil, it's probably better to take market rates elsewhere, and use the extra $20k to invest/bootstrap your own startup on the side :)