HN Explorer

Ask HN: I'm joining a startup and I have a couple of questions.

4 points by launchplus ↗ HN
Hello HN,

I've been invited to join a startup and I'm pretty keen on the idea so far. But I have a couple of qns that I need some help with.

1. They are offering me equity. Should I take it? Or skip this and stick to a higher salary?

2. They just closed a Series A and their product is already profitable. Is it polite for me to ask for figures?

(I'm assuming figures will be helpful for me to determine if I should take equity.)

5 comments

[ 155 ms ] story [ 2550 ms ] thread
rhizome
1. Don't reject equity, but don't lower your salary for it either.

2. If their product is profitable, why are they taking funding?

3. Go ahead and ask for numbers, they shouldn't be secret.

steventruong
You can be profitable and still choose to take on funding for a variety of reasons. Although these may not be the reasons the startup in question above chose to, a few that comes to mind includes:

1. Investors can and should be considered an extension of your own team. The right investors can greatly add value outside of financial needs and greatly help in a variety of areas.

2. While you might be profitable, an infusion of cash can help you grow faster and the investors can help you grow properly so you don't end up growing prematurely. Plenty of entrepreneurs who have previous successful exit and capital to float their own companies, and companies who are profitable, still choose to raise funding.

3. To help validate their company to potential employees and ensure there is valuation provided for the stock issued. I know some people refuse to join a startup if its not backed even if the company is profitable.

That said, profitable is subjective. Is it a lot, a little, ramen level? The above are not the only reasons but just some that comes to my mind right now.

rhizome
Yeah, I wasn't trying to answer the question prematurely because there are indeed "a variety of reasons," and we don't know jack about the company. My point was to recommend asking the question.
rorrr
If they are really profitable (and make sure to check that), I'd take as much equity as I could, but I'd definitely ask what % of all equity these stocks represent.

It could be like "here, we're giving you 10,000 SHARES!!!", only to later find out they issued 10 billion shares.

md1515
Definitely ask to see the figures. If they truly are profitable and have closed a series A - TAKE IT.

Usually startups that are successful have a tough vetting process. If they want to hire you, they want to hire you. Do not get greedy, but take some equity and get a bit higher salary as well.

Be careful, though. I have seen a few things about company exits that leave some shareholders with nothing (some stipulation with the deal itself). Good luck