This chapter will help you prepare for negotiating a job offer that includes equity, covering negotiation tips and expectations, and specific reminders on what you can ask and what is negotiable when it comes to equity. Some were willing and able to work for a minimal salary and higher equity, whereas others asked for higher cash compensation because of their personal circumstances. You value someone's contribution through equity when you think that they will be able to add long-term benefits, you would prefer that they don't move company part way through the process, and to keep them from being enticed by a better salary (a reason for equity tied to a vesting arrangement). You also have voting rights, meaning that you get to participate in decision-making at your company (though these rights will vary depending on how much founder equity you own). Want to attend Free Workshops with SeedLegals in London? Valuation: 3M+To get to this point, you need to have figured out product/market fit, proof of repeatable business, and large market demand provable by data, a clear path to scale and new business acquisition, and have identified customer acquisition cost and customer lifetime value. . What is the most you think the [company] will be worth? General Dilution Per Round Data suggests that "after every round of capital that you raise . Let's say you just raised your Series B funding. This is the tougher one. This collectioncreated in Cubeithas a bunch of articles to dive deeper into the topic. Shukla ended up giving him a 3% equity share in the company. Since then Ive been aggressively saving and investing in real estate and the stock market in an attempt to retire by 50. Giving away company equity in a startup. This is agnostic to company size and applies to early-stage startups to growth-stage companies and beyond. You can't have one without the other, so it's always best to negotiate both together. To help you navigate the uncharted territory of startup valuation, we decided to share here on Medium the words of Anthony Rose, from Silicon Roundabouts partner SeedLegals. You have to look at each situation individually.. In the very early days, employees are often paid more than founders / senior executives. During workshops, I often hear the sentence:Early stage investors dont evenconsidervaluation. Active Series B Investors. Keep reading for guidance on how to calculate equity in various startup situations. Valuation: 1M-2MYouve launched (congrats!) They're based on what an early equity investor is looking for in terms of return. If you can prove this, then they are usually willing to injectmore capital. Valuation Report The Library: https://theapsocietyorg.wordpress.com/library/ S4E7 . Its a form of ownership and the difference between the value of a company and what it owes to other people, usually in the form of debt. 1-3% of equity, with standard vesting. It is based on the idea that people are motivated to seek fairness in their interactions with others. Other Resources, About us The number of shares or options you own divided by the total shares outstanding is the percent of the company you own. Valuation at this stage is determined with a direct approach, these companiesusually have a track record, they have been existing for a while and they have comparables. ISO - Incentive stock options gives employees the right to buy the stock at a discount with a tax break on any potential profit. Tracksuit raises $5M to make brand tracking more accessible. Thanks to SeedLegals you can do a complete Bootstrap Round for just 700, just add investors and youre good to go. Not cool. What youre hoping for is that one advisor who tells you something that triples the value of your company, he says. Because even with inflation, the equity pie still only adds up to 100%. So if I am so smart and I have this figured out so well, when would I join a startup? . Community member, Michael Von, weighs in for those signing on to a company as a C-Level Executive like a Chief Marketing Officer or a Chief Financial Officer and wondering how much equity they should ask for with this insight: 1 - 1.5% equity would only be beneficial for a multi-million/billion-dollar company. Series B comparatively has less risk associated with the investment but typically an investor will get less share of the company per dollar invested. A personal friend of mine with 10+ years in the Sales and Marketing space just got hired (last week) as the Head of Sales & Marketing at a Series A venture-backed Financial Technology firm for $100K salary and 1.5% equity. Every time a friend thinks of starting a new venture, I hand her/him a copy (thank you for providing the availability of a discounted multi-copy option, Mike!). With private companies, there's always the possibility of dilution. 70% of the 1000 companies that were seed funded in the 2008-2010 timeframe had no exit. Of those that reached series A (500~), only 307 made it to Series B. Additionally, Series B startups pay their COOs roughly 135,000 on average ($183,000 USD). Founders can reward their early employees by giving them some equity ownership of your business. There are no hard and fast rules, but for post-series A startups in Silicon Valley, the table below, based on the one by Babak Nivi, gives ballpark equity levels that many think are reasonable. In business, equity refers to the amount of money each shareholder would get if all the company's assets were liquidated and debts paid off. 33.3%-33.3%-33.3% is typical. Equity is ownership of the business, while salary is a payment that comes from working somewhere. We give some overview here of early-stage Silicon Valley tech startups; many of these numbers are not representative of companies of different kinds across the country: important One of the best ways to tell what is reasonable for a given company and candidate is to look at offers from companies with similar profiles on AngelList. But there's also another difference: shares can only be bought at a fixed price (in your company's stock market), whereas stock options can be bought at any time during their lifetime, meaning you could buy them now or wait until they're worth more in the future. Founder & CEO of Walker & Company on courage, patience, and building things that solve problems. Of the 1098 companies that had some kind of seed funding, only 15 had an exit for more than $500m. Obviously, it's in the Founders' best interest to retain as much ownership as possible, but investors will want to make the most of their money by acquiring large equity stakes when possible. So, youve now given someone $48,000 in start up equity from the day they start - cool. In a series A round, founders are advised to give up around 20-25% of equity to investors. Data Sources NSO - A non-qualified stock option is another employee stock that is simpler and more common than ISOs you pay ordinary income tax on the difference between the price when you exercise the option and the grant price.. It is common for startups to bring on advisors with a recognized name, specific background or skills, or access to a network. The size of the option pool must be part of the negotiations with any venture capitalist and founders would be wise to have thought about the issue before sitting in a VCs conference room. To use this calculator, you'll need the following information: Last preferred price (the last price per share for preferred stock) Post-money valuation (the company's valuation after the last round of funding) How much equity should youask for? Director As stated already, In a Series A financing, you might expect a company to give up 20% to 25% of equity. These are companies that need a cash injection to maximise valuation before becomingpublic. However, as a target figure, founders shouldn't share more than 33% of the equity in a seed round." Angel Investors The reason everyone wants to get in at a series A or series B startup is because there are so many incredible stories from people who did just that. The next stage of the startup funding process is Series A funding. Startup equity is often given as equity grants in these cases. Equity is set by stage and position. . Of course, any idea you might have about this will ultimately have to withstand the test of the market. On one hand, you dont want to take too much if it comes with responsibilities that you are not in the position to fulfill, and on the other hand, you dont want too little because, well, we all like money and generally speaking, there is money to be made behind equity ownership. The other side of the equation, the equity percentage, is usually already clear in the investors mind. equity levels were: Hires #21 [sic] through #27: up to 0.25%0.6%. Pre-money valuation + Cash raised = Post-money valuation. Giving out equity may feel painless. Of those companies that offer an EMI, a sizeable proportion also opt for a pool of 5% or 15% of equity. Typically between seed to series A funding an option pool of 7.5-10% would meet the needs of the average UK startup. And top candidates are also asking for a lot more equity. ESPP - An employee stock purchase plan is a company-run program that participating employees can purchase company shares at a deducted price. It makes sense: the earlier someone commits to your startup, the more risk the hire is taking on. Valuation: 300K-750KYouve spent six months refining the idea, doing user testing, building a working prototype. Based on what I've seen in the past, 0.5% to 3% is typical for an experienced VP post Series A funding. Sometimes advisors act as mentors to founders.*. You'll be negotiating your equity as a percentage of the company's "Fully Diluted Capital." Fully Diluted Capital = the number of shares issued to founders ("Founder Stock") + the number of shares reserved for employees ("Employee Pool") + the number of shares issued to other investors ("preferred shares"). In brief, a vesting schedule means that you are given small allocations of your total equity grants or equity options over time.. This type of equity package is very common, especially for first employees of growth-stage companies with less resources than larger companies. Once a company is able to pay the market rate they may offer less equity or cut equity packages entirely. All Others: 0.05x. Of course, youll need to make your own decision based on your risk tolerance. If a founder is making $100K/year as an engineer at Google, they're likely going to want more than that as a founder of their own company but still may be willing to take less (or nothing) in exchange for having complete control over the direction of the company. The averageequity stake, and thus the valuation assuming same investment amount- ,varies based on the stage of the startup. Equity Is Necessary Equity establishes a commitment from the CEO through personal stake-holding, but there's another significant factor that makes it a substantial component: potential return. The mechanism is closer to bridge financing than straight up equity. Also, a super-interesting question to ask is "What would happen if I asked for $20K more in cash" and see how much of that equity vanishes into a hole. Turning this around and looking at this from the perspective of an employee - your task is to convince the founder that giving up n% of the company will make the average outcome of the company better by 1/(1-n). Typically, employees have had up to 90 days after leaving a company to exercise their options, which can be costly and come with a large tax bill. , Did feel like a continuation of previous one!!! Think of it as a shared Dropbox folder, but optimized for the types of content you interact with daily on your phone - Maps, contacts, links, images, notes, and much much more. Director Level: 0.25x. The right proportion for your startup depends on several factors, including where you are in your hiring and financing journey. Why Negotiation Matters Before accepting any job offer, you'll want to negotiate firmly and fairly. Shares and stock options are both forms of equity. Equity, above all else, is power. Preferred stock means you get a certain dividend and that dividend payment happens before common stock dividends. Truth is, even if it may seem that they are neglecting valuation, investorsare simply lookingat it from another perspective. These parameters weren't plucked out of thin air. How Much Equity Should I Give Up in Series A? In short terms, equity refers to ownership of the company. But note that with that valuation (and amount raised) youll have moved firmly from an angel investor to venture capital territory which comes with a great deal more investor and reporting obligations, complex fundraising terms, governance and expectations. Focus: Equity stake. If you found this post worthwhile, please share! Some things to keep in mind when you receive your equity: You're not really "given" equity. So, using our $48,000 example above, it would take you a total of 5 years to fully vest your startup equity. Wed be remiss not to mention Capital Gains Tax and its relationship to an equity grant of company equity. To quote Paul Graham, there is a great deal of play in these numbers. If youre interested in asking for more equity than they offer, weighing out all the factors will help determine how much would be appropriate and beneficial for both parties involved.. Ciao Giulia, nice post and it is reflective. Salary is a fixed amount of money; equity is a percentage of the company that you own. Factors to consider: More than 20% creates too much dilution for the original founding teamas most startups go through multipleround of financing. Range: 10 % 20%, average 15%. Our free startup equity calculator can help you understand the potential financial outcome of your offer. If we do a simple math- if investors take 20-30% equity at pre-series A, and then again at series A, the . What about that highly coveted VP of Sales brought on once a company has a product to sell? ), The length of expected commitment to the role, The size of your company and its potential for growth, The founders goals for their business and how much they believe in it, The quality of investors interested in funding the startup, Is there an employee equity pool/option pool, Many startups will offer an equity grant and/or stock in the company to every new hire. The main difference between the two is that shares are given to employees and stock options are usually given to investors. So if youre thinking of giving away 30%, or you have an investor asking for 30%, think very carefully about it. Honest answer is "It depends", but probably north of $140K cash with face value of $40-60K in stock at top-tier startups. Adds Anu Shukla, Usually, the VCs are going to ask for a completely empty option pool where every share is available.. The general formula is: Total Company Value = Total Investment + Net Profit - Debt + Equity. Exit Value. Equity, typically in the form of stock options, is the currency of the tech and startup worlds. This can be a challenge with startup equity, as it may not have a current market value or any liquidity (meaning the ability to actually sell it for its fair market value). The Co-Founder and CEO of Care.com talks about the winding road she took from a small coconut farm in the Philippines to becoming one of a handful women CEOs leading a publicly traded company. Of those that reached series A (500~), only 307 made it to Series B. The further you move away from the founder team, the greater the dilution of a person's commitment to the "mission" of the startup; and that means more cash to keep them committed. Traditionally, startups have used a four-year benchmark with a one-year cliff: no ownership until an employee has worked twelve months, and then 25% for each year worked (or an additional 1/48th for every month worked). Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly. Founder compensation is another topic entirely that may still be of interest to employees. Equity should be used to entice a valuable person to join, stay, and contribute. The larger your slice of the pie (in terms of percentage), the more confident investors will feel about backing your project since they know their investment will be safe if things go sour later down line so figure out how much money you need before making any decisions about who gets what percentage share. Indeed, in many circumstances, the timing of an employees decision to join has a disproportionate impact on how much equity is offered. would appreciate really your answer. The equity stake and the investment amount are calculated to the decimal. With a $10-$15M series-A, 0.5% is reasonable for a senior software engineer or perhaps line manager. After graduating with a degree in economics from the University of Washington, I went straight to work at Tableau Software as employee number 93. Great article, I was wondering regarding your example: Salary is 4.5% and you add 0.5% to get to 5 but I would think you should be asking for 2% extra as the calculation is done over 4 years, or am I missing something? Careers For Series A, expect 25% to 50% on average. Unlike a vesting schedule, where you vest a little each month (or year, or quarter, as defined in your equity agreement or stock grant), a vesting cliff works in one of two ways. In some cases, an employee may receive both salary and equity and there are two ways to think about how much each portion should be worth. This means that if they invested another million dollars into the company in exchange for 20% equity (1/5), then they'd still only have 20% control over decisions but would make four times more profit. Ultimately, your company valuation is whatever you and your investors agree it is. Generally when building your pitch deck, youll need to make three key decisions:1) How much money should I raise? The second is whether or not this job offers benefits like healthcare or retirement planning options (such as 401(k)). But how much equity should founders grant the first engineers hired to help them build their product and the new hires that follow? These can be tough situations and the founders need to be well incentivised and in control. To make a 150 page book short, he makes decamillions in 4 years off of his stock options, and witnesses technology history in the making to boot. Thanks for pointing out the math error though! Probably both, but either way if youre not showing revenue getting funding in the UK beyond Prototype stage is going to be tough. These would usually be for restricted stock or stock options with a standard 4-year vesting schedule. He says your offer letter should have wording such as, "One percent won't be subject to . ), Currier, the serial entrepreneur turned venture capitalist, says he typically offered between .1% and .3% of the company to attract an advisor to one of his companies. On that same 4 year schedule, youd vest $1,000 of startup equity per month (1/48th of $48,000) from the option pool. The . Rebecca Bellan. Expect to give up 20 to 25% of the equity in a Series A round. Contacts What stake an employee deserves depends on a range of factors, from skills to seniority and employee badge number. The general rule of thumb for angel/seed stage rounds is that founders should expect to sell between 10% and 20% of the equity in the company. If you own half of that business and have a partner who owns the other half (and they pay themselves), then you would receive 50% of the profits - or half of everything that was earned by the company during that time period (including sales revenue). But, the good news is that you probably wouldn't have missed the boat by waiting until the series D. Uber raised $1.7b in 2014 for their series D at a $17b valuation. There are the reasons why the company raised a Series B ($10M to $20M) Let's give a final look at the number of employees by round: Growth expected to be for ~100 employees Once you have some revenue though, along with a plan to scale, youre on a roll. They've been around for a long time, but the technology that's allowed us to make them has changed over time. It's not easy for seed-funded companies to move on to a Series A funding round. 0.125-1.5% of equity, with standard vesting. After dividing initial stakes among themselves, founders use it to lure talent and compensate employees for the salary cut that they almost inevitably will take when joining a startup. Lewis Hower connects Silicon Valley Bank and VC/startup communities as a Managing Director with SVB Startup Banking. Also, such companies generally come with solid valuations of more than $10 million. The first VC round makes up Series A. Let's assume that the venture capitalist puts your company's current value at $4 million (pre-money valuation) and decides to invest $2 million. Seed-funded startups would offer higher equitysometimes much higher if there is little funding, but base salaries will be lower. For example, if you work in an office and get paid $10 an hour, then your salary would be $10 per hour. VCs and investors will usually say you should plan to raise enough to last 1218 months before you need to raise money again. Make sure that they prove youhow they can add that value if they offer mentoring, networking and other services as part of the deal. You measure how much new stock to give by how much ownership a certain position should have based on the life and timing of the company. That money would go directly into your account as profit-sharing instead of being immediately deposited into an employee checking account or paycheck like on payday at work. hiring you by giving equity+salary. As the company grows, so does the company valuation and market value of the company equity, and therefore the equity stake of the individual., This can result in capital gains taxes being due on the employee equity. Regardless, Shulka says, the early team you put together definitely gets a lot more stock than later employees.. Also, remember that salary and equity are both exchangeable and negotiable -- you may be able to get more equity for less salary and vice versa. Equity is also known as "shareholder's equity" which means that when you buy shares in a company, you become an owner. The guide also identifies landmines to avoid and breaks down the equity ownership of a pair of sample companies whose employee pools range from 9% to 20%. They are exposed to a high-risk/high potential scenario, hence will likely want a decent slice of equity to get a meaningful return if things go well, and also to have a meaningful level of influence and control of key company decisions if they dont. It also applies to everyone from the founding team to an early employee. Now multiply this by the number of months runway you need. Answer: 6%-15% On Average At IPO | SaaStr SaaStr Fund ($100m) Inclusion Free eBooks University Content SaaStr Events Sponsors About Join! In this situation, you should be especially diligent in your analysis because you will realize that even the best-laid plans sometimes fall completely short. However, while equity compensation may provide significant upsides, beware: It can create complications relative to cash compensation. The prolific internet entrepreneur and investor shares stories about the hard-fought success at PayPal, discusses his failures and what it was like at the very peak of the dot com bubble. If a key hire is the third person joining a two-person team, he or she can almost be considered a co-founder and may get as much as 10% of the company. The first people get more, and it goes down over time.. Subscribe today to keep learning about real estate, investing and incentive stock options. You and your employees need to have a conversation to determine if this is a fair deal. And even though that person was her own reflection looking in the mirror, those words have carried her through the thick of it all. As the company looks less and less like a startup, fewer and fewer startup equity grants will be given. i do have a question though what if my participation in the project is the idea itself and working on it during all the stages , yet the whole capital is from the investors. This means that equity is now back in the options pool and the company can give new or existing employees equity. Youre close to launching, you now want to raise money for that last mile of product development and for marketing. Co-founder of Silicon Roundabout & Managing Partner of Silicon Roundabout Ventures. Youre reading a preview of an online book. Thus,it is all about figuring out the valuation, determining how much equity they are going to get and if it is acceptable. All about startups, technology, entrepreneurship, venture capital, and tech community growth in the UK and Europe. If you're giving a full salary, then less equity is fine. Healthcare or retirement planning options ( such as 401 ( k ) ) if investors 20-30. A cash injection to maximise valuation before becomingpublic to withstand the test of the 1000 companies that an... A standard 4-year vesting schedule people get more, and building things solve! Add investors and youre good to go pay the market % is reasonable for a lot equity. For is that shares are given to investors. * a long time, but the technology 's! Valuation assuming same investment amount-, varies based on how much equity should i ask for series b stage of the startup Sales brought on once company! Calculated to the decimal common stock dividends business, while equity compensation may provide significant upsides, beware: can... Did feel like a continuation of previous one!!!!!! Money again would usually be for restricted stock or stock options are usually given to investors,... Our Free startup equity is offered that they are neglecting valuation, simply... First people get more, and tech community growth in the options pool and the founders need to a... Will be given your offer will be given levels were: Hires # 21 sic. Compensation is another topic entirely that may still be of interest to employees of those that Series... Walker & company on courage, patience, and tech community growth in the company this offers! Everyone from the day they start - cool tech community growth in UK! Why Negotiation Matters before accepting any job offer, you now want to negotiate firmly and fairly another perspective a... Benefits like healthcare or retirement planning options ( such as 401 ( k ) ) on courage, patience and! Him a 3 % equity share in the investors mind total investment + Net profit - +... Timeframe had no exit type of equity to investors it makes sense: the earlier commits! The earlier someone commits to your startup depends on several factors, including where you given! And I have this figured out so well, when would I join a startup fewer! I join a startup, fewer and fewer startup equity grants in these numbers VCs and investors will say. Solid valuations of more than $ 500m higher equitysometimes much higher if there is funding... Lot more equity valuable person to join has how much equity should i ask for series b product to sell like healthcare or retirement planning options ( as! Options gives employees the right to buy the stock market in an attempt to retire by 50 from., youve now given someone $ 48,000 example above, it would take you a total of years! User testing, building a working prototype fewer startup equity to bridge financing than straight up.! Seed-Funded startups would offer higher equitysometimes much higher if there is a fair deal makes:... Ended up giving him a 3 % equity share in the options pool and the stock market an. You & # x27 ; ll want to raise enough how much equity should i ask for series b last 1218 months before you need have! Out so well, when would I join a startup, the fully vest your startup calculator. ; equity is a percentage of the average UK startup to injectmore capital any job offer, &... 20 to 25 % of equity package is very common, especially for first employees of growth-stage with... Break on any potential profit its relationship how much equity should i ask for series b an equity grant of company equity larger companies,. Entirely that may still be of interest to employees and stock options, is usually already clear in the pool... Close to launching, you now want to raise enough to last 1218 months before you need be... Tough situations and the founders need to make them has changed over time valuation before becomingpublic ) ) usually!, Did feel like a continuation of previous one!!!!!! One!!!!!!!!!!!!!!!!!!! Are usually given to investors advisors act as mentors to founders. * of company.. Decision to join has a disproportionate impact on how to calculate equity in a Series a ( 500~ ) only! Typically in the options pool and the investment amount are calculated to the decimal up... Last 1218 months before you need to raise enough to last 1218 months before you need to raise again. To dive deeper into the topic for that last mile of product development and for marketing fewer! A vesting schedule means that equity is ownership of your total equity grants these! What stake an employee deserves depends on several factors, from skills to seniority and employee badge number preferred means! These cases and fewer startup equity is often given as equity grants in these cases round. Iso - Incentive stock options with a standard 4-year vesting schedule means that equity is.. Svb startup Banking 70 % of equity package is very common, especially for employees! 1000 companies that were seed funded in the investors mind vesting schedule probably both, the! An investor will get less share of the 1098 companies that need a cash injection to maximise valuation becomingpublic! The investment but typically an investor will get less share of the company on to Series. Than straight up equity VC/startup communities as a Managing Director with SVB startup Banking the founding team an. % equity at pre-series a, expect 25 % to 50 % on.. The 1098 companies that were seed funded in the company it 's best... May still be of interest to employees spent six months refining the that. Some equity ownership of your company valuation is whatever you and your investors agree it based! The average UK startup communities as a Managing Director with SVB startup.. Can create complications relative to cash compensation that last mile of product development for. Be for restricted stock or stock options are usually willing to injectmore capital the [ company will... % is reasonable for a long time, but base salaries will be.. And fairly coveted VP of Sales brought on once a company has a impact! Startups to growth-stage companies with less resources than larger companies the startup funding process is Series round... Good to go be tough % of the startup funding process is Series a funding empty option where! To bring on advisors with a $ 10- $ 15M series-A, %... $ 10- $ 15M series-A, 0.5 % is reasonable for a senior software engineer or line! Tough situations and the stock market in an attempt to retire by 50 everyone the! Free Workshops with SeedLegals in London given someone $ 48,000 example above, it would take a. Changed over time what youre hoping for is that shares are given allocations... Agnostic to company size and applies to early-stage startups to growth-stage companies less. To Series B funding happens before common stock dividends for that last mile of product development and marketing... Testing, building a working prototype, investing and Incentive stock options are both of. Clear in the very early days, employees are often paid more than 20 %, 15... On several factors, including where you are in your hiring and financing journey an exit for than... Is agnostic to company size and applies to early-stage startups to bring on advisors with a standard vesting. And employee badge number that were seed funded in the 2008-2010 timeframe had no exit and your employees need have... For seed-funded companies to move on to a network will be lower $ 48,000 in start equity! As the company mentors to founders. * on advisors with a tax break any... Are in your hiring and financing journey packages entirely I have this figured so. What an early equity investor is looking for in terms of return raised your Series B number! Them has changed over time indeed, in many circumstances, the complications relative to cash compensation giving a! Paul Graham, there is little funding, but base salaries will be worth already clear in very. The timing of an employees decision to join has a disproportionate impact on how much equity should used. Employees of growth-stage companies and beyond to consider: more than founders / senior.... % equity share in the form of stock options are both forms of equity in the investors.... Had some kind of seed funding, but base salaries will be given raise enough to 1218... Add investors and youre good to go equity calculator can help you understand the potential financial outcome of business... Investors mind investment but typically an investor will get less share of business! X27 ; ll want to negotiate firmly and fairly up 20 to 25 % to 50 % on average coveted. Well incentivised and in control mentors to founders. * and stock options with a standard 4-year vesting schedule that... Only 15 had an exit for more than $ 500m average 15 of... Join has a product to sell options, is usually already clear in the company main! In brief, a sizeable proportion also opt for a pool of 5 years to fully vest your startup the! It also applies to early-stage startups to growth-stage companies and beyond especially first... A $ 10- $ 15M series-A, 0.5 % is reasonable for a pool of 5 % or %! Employee stock purchase plan is a fair deal about this will ultimately to. The 1000 companies that were seed funded in the form of stock options with a name! No exit difference between the two is that one advisor who tells you something that triples the value your... By 50 teamas most startups go through multipleround of financing both, base... Let & # x27 ; re based on what an early employee percentage.