How to join a Series A company and not get screwed

TL;DR - You can stop now if you are not directly reporting to the Founder of the Series A company. I wrote this article for friends who are joining Series A startups.

So you are offered a hot VP position of a company that recently raised their Series A. Better title, maybe even more base salary, but you don't know what the equity portion should be. Here are a few steps to not get screwed:

1. Find out how much your shares are worth. You can ask based on two questions:

• What % of this company is this, and how much was the company's last valuation
• OR What was the company's last preferred share price ?

Either one will help you get an idea how much your shares are worth. If you are coming from a more established tech company, it is highly likely that the number really "sucks" in comparison to the yearly RSUs that you are on track to make.

Before you negotiate, you need to throw away lots of shitty advice like "look at the comps", and re-orient your thinking:

1. The system is DESIGNED to reward founders and venture capitalists. It is DESIGNED to screw employees.
2. 4 year vesting cycles where developed in an era where from time to start a company to a liquidity event was 4 years. Today, its more like 8 years - so the system is screwed.
3. The internet is wrong - if you go to angel list, most advice tells you to take a 0.1% to 1% equity. That is crappy advice. You need to compare yourself on what you will get at IPOed company with RSUs.
4. The company is PROBABLY overvalued by 30%, so you need to automatically discount your option value be the same amount.
5. Founders WANT to compensate you for taking their burden. That's why they are hiring an executive.

After you re-orient your thinking, the key to getting what you really deserve is to be "treated like a founder". Here is what I mean:

1. Founders usually have lots of ownership of the company. If they really value you like they value each other, they should be willing to give some of their shares to bring you onboard. This is a very powerful thing - so get agreement from them by expressing your desire to be treated as a founder.
2. Figure out how many shares the founders own. Its a lot easier to ask a founder to give away 5% of their shares to bring on a friend than it is to ask a founder for 10%. So naturally, asking founders to give their shares away works better with single founders rather than 3-4 founders.
3. Ask for the same amount per year, but extended vesting terms. For a company that just raised a series A, realistically most liquidity events are 6 years out rather than 4. If you ask for a 6 year vesting cycle instead of 4, you can usually ask for 50% more equity. Founders want you to stay at the company till a liquidity event occurs, so this is not too difficult to negotiate.
4. Make the founder feel bad. Paint situations where the company has an exit, and you get screwed where the founder comes out "ok". To actually paint these scenarios, you need to know what valuation your company is, how much the founder owns, and have a few comparable companies that made "OK", but not awesome exits. Negotiate enough shares such that if the "OK" occurred, you don't get screwed.
5. Ask for more salary - sometimes it is just easier to ask for this instead of equity.

Startups can be very rewarding, but it becomes suddenly un-rewarding when they don't make financial sense. With a little bit of thinking and planning, joining a Series A company doesn't have to be a financial disaster.