Advice joining a startup
Hi, I need an advice about joining a startup. I'm a young (~3y exp) full stack developer (java, javscript) working for a dev shop (french SSII). I always wanted to work for a startup so I purposed to a not yet startup my services. It'll soon raise angel money and they purposed me to work as a frontend dev for 4% of equity + 1% based on performance. It will be work on the side of my current work. A competitor who will do nearly the same thing just raised 3M€. So they estimate to raise in 4 or 5 months at least 1M€.
For joining them, as to say I'll be commited to the project, they want me to give them 500€.
Is it a good purposal ? Can you help me make my decision ? Thanks
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>> It'll soon raise angel money ...
Soon is usually not as soon as expected.
Do they have another "employee"? Did they have someone before at your position? How did the story ended?
The simplest question to answer would be opportunity cost. What will you lose if you do this for the amount time it needs to be done and nothing works out or you get fired when they finally start kicking-ass? If the answer is only "time spent," then I think its OK to just say yes if you have 500 Euros to gamble.
If the answer is more complicated than that, I suggest you evaluate it by answering some or all of following questions (in no particular order)
Market: 1. Are you convinced their pitch deck to you? 2. How long do you think it will take them to serve 0.5%-1% of their stated total addressable market? Is that reasonable time in your scheme of things
Team and execution: 3. Are you convinced that the founders/existing team will do everything they can to acquire customers? Is that "everything" good enough in your opinion? 4. How much do you think they will make your life miserable when they are in stress? Is that acceptable level of misery for 2-3 years? (corollary: I hope you are convinced they won't dump you at the first opportunity)
What can you do? 5. Do you have the bandwidth to execute things, on the side, while working full-time or part time? If you have to quit your job for the startup very soon, would you be able to execute (financial or otherwise)? Oftentimes, there is second guessing when the going gets tough -- so think about that too 6. How valuable is 500 Euros for you now? Can you blow it?
If answers to all the above ones point you in the direction of committing to this effort, you should consider asking for investor status. You should also consider asking for an upfront equity (for example: 0.5% of your 4% vesting on the day you pay 500 Euros) and no cliff.
On the other hand if that is what they really need, they should either gives you shares for it or have it structured as a loan to the company.