Question
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.
Answer
Based on the company valuation you have to set a base line with your 'market' annual salary. For ex. Year 1: Your market annual salary is $300k and the startup actual valuation is $3M, you have to own a minimal equity participation of 10% if your salary was ZERO for year #1. For the next year its important to set a mixable equity/salary to avoid common founder problems. For ex. Year 2: You have 10% equity (from last year), This year the company valuation is $5M, and your 'market' salary is $350k. With $175k salary assignment you have to negotiate an equity increase from 10% to 13,5%.
