What is usually the best practice for the following case.
I was "hired" 1,5 years ago to a startup as an advisor (as a first advisor to them) and the startup gave 2% equity for this role. Now the startup wants to hire me full time (salary + equity) as one of their Directors to "Department x" as the startup has received seed funding.
Given that the advisor role was already promised 2% equity before, what kind of offer/compensation package would be fair to receive from the startup perspective regarding the additional equity part?
As an advisor, what kind of offer would you view fair and would like to receive in this case?
As the startup founder, would you be somehow (in which way?) more generous in your offer given the fact that the advisor was on board and helping out from the beginning of the startup vs other later advisors?
I would guess that there is no single answer to your question. It depends heavily on what's important to you. People all like to be compensated in different ways. Sometimes it's a title, sometimes it's cash, sometimes it's decision-making authority, sometimes it's freedoms or flexibility. What matters to you is much more important in this case than what's "fair." Business isn't about being fair, business is business.
My personal feeling is that if you convert from advisor to employee, you would not have earned more equity. You have already claimed what your advice was worth. Now you get salary as an employee, not more equity. Your conversion is not proof that you're indispensable. It simply says they're willing to pay you for more of your time and trust you to continue delivering value in return.
If it were my company, I would not offer additional equity to a converted advisor. Now that I'm paying you money, that's your compensation. Equity was only when I could not pay you with cash. Remember, ownership has nothing to do with fairness or generosity. It's about what works for the business. It would be entirely different if you asked to buy equity in my company to demonstrate your faith and to take on more of an ownership role when you convert. But granting it to you, that seems far from likely.
Thank you for your response and interest to work with our company. We must let you know at this time that your employment with us will be part-time as you can still keep your current job and work with us simultaneously,your time to work with us will be between 1-3 hours. Haven introduce our company to you, please see the what the job entails.
The roles of Xinyi Glass Ltd. USA Australia, Indonesia and Canada executive regional are outlined below:
1. Communicate with customers within your regions via telephone and email means when necessary.2. Receive payment(wire transfer,check,direct deposit etc) on behalf of the company from customers within the United States, Australia, Indonesia and Canada region.3 Help manage our company’s presence and payments for products purchased.
PLEASE NOTE: You are NOT required to spend your personal money on any part of this job, Xinyi Glass Ltd. will be responsible for all expenses (if any) which will be sent to you when needed.
COMMISSION: We have a Corporate and Individual position opened. For Corporate, your company will be paid on a commission basis of 5% (i.e. 5% of any amount received and processed on behalf of our company) and $10,700.00 USD monthly payment. While for Individual position, you will be paid 5% commission for any amount received and processed on behalf of our company and a monthly payment of $5,200.00 USD. If it is acceptable to you,please fill out the below questionaire for the position(Individual or Corporate) type you choose to enable us prepare and send our company Memorandum of Understanding to you which is our standard agreement that will define our business relationship/partnership.
1. For Individual InformationFull Name:Residential Address:Occupation:Home Phone:Mobile Phone:Fax:Email:Date of birth:Sex:Any Form Of ID Card:
2. For Corporate/Company InformationFull Name:Company Name:Company Address:Contact Person:Position Held:Office Phone:Home Phone:Mobile Phone:Email:Date of birth:Sex:Any Form Of ID Card:
Our agreement process is simple and flexible to suit both our company and our partner(yourself) around the world,you can review the document carefully and thoroughly before you embed your signature.Let us receive the above requested information for us to perfect the agreement.
We hope to hear from you soon.
SincerelyMs. Li Yang.www.xinyiglass.com
Xinyi Glass Ltd Email