We are in the common stock series. At the moment I have been investing 32 hours a week in the startup for the past 4 months without receiving salary. I handle marketing, communications, PR and sales. The equity pool reserved for first employees is 40%. There are around 20 people working at the startup, from which maybe 6-8 invest the same or a bit more time as me. The two founders included. Thanks for your help.
Determining the right amount of equity to ask for as a Chief Marketing Officer (CMO) in a startup depends on several factors, including the stage of the startup, your level of involvement, the equity pool available, and the contributions of other team members. Here are some considerations to guide you:
### Factors to Consider:
1. **Stage of the Startup**: Early-stage startups typically offer more equity since they can't afford high salaries. Your investment of time without salary is also a factor here.
2. **Equity Pool**: Since 40% of the equity is reserved for the first employees and there are around 20 people working at the startup, understanding how this pool is distributed is crucial.
3. **Your Contribution**: As you handle marketing, communications, PR, and sales, your role is significant, especially in a startup where these functions are critical for growth.
4. **Comparative Contributions**: Consider how your contributions compare to those of other key team members. If 6-8 others are investing similar or slightly more time, their equity stakes can provide a benchmark.
5. **Market Norms**: Typical equity for a CMO in an early-stage startup can range from 1% to 10%, depending on the stage and the value you bring.
### Suggested Equity Range:
Given your situation, a reasonable equity range to ask for as a CMO could be between **2% and 5%**. This is assuming the following:
- You are one of the key contributors.
- You are working almost full-time without a salary.
- There are other team members with significant contributions as well.
### Approach to Negotiation:
1. **Assess the Current Equity Distribution**: Understand how the 40% equity pool is currently allocated or planned to be allocated among the first employees.
2. **Highlight Your Contributions**: Emphasize your roles and responsibilities, and how they've impacted the startup's growth.
3. **Consider Future Growth**: Be prepared to discuss how your role will evolve as the startup grows and how you will continue to add value.
4. **Benchmark Against Others**: If possible, find out how much equity other key team members (especially those with similar time investment) have or are asking for.
5. **Negotiate Terms**: Be open to negotiating not just the percentage but also the vesting schedule, which ensures that you earn your equity over time, aligning your interests with the company's long-term success.
### Example Calculation:
If the 40% equity pool is divided equally among 20 people, each person would theoretically get 2%. However, since contributions are not equal, key members like yourself could justify asking for a higher share.
If you aim for 3% of the total equity, here’s how it might break down:
- Total equity pool: 40%
- Number of significant contributors (e.g., 10 key members including yourself): 40% / 10 = 4% per key member on average.
- Asking for 3% is within reason, given your significant contribution and the average allocation.
### Final Recommendation:
**Ask for 3% to 5% equity** in the startup, presenting your case based on your contributions and the comparative benchmarks of other team members. Ensure to discuss and agree on a vesting schedule to align with the company's growth trajectory.
