This is an anonymous post from an Elpha member.

How much equity for late joining cofounder?

Dalia224·Aug 19, 2020

I’m considering joining a company as the 3rd cofounder. The other two founders have already started working on the idea for a few months, have put together the preseed Pitch deck and already got a few commitments but still waiting for a lead.They’re asking me to join as CPO/cofounder, as the other two founders don’t really have a technical background and the product is fintech, which I have a lot of experience with (building fintech products).They said they wouldn’t give me equal equity since I’m joining late but they don’t really have anything right now besides a rough general problem/idea and some initial preseed investments. And neither are industry experts in the area we’re trying to disrupt.How much equity do you think would be fair for me to ask for? I’ll be the most experienced on the team with the most relevant experience in our topic area.Would really appreciate any insights and advice! Thank you🙏

Tawnya60·Aug 20, 2020

IMO, joining “late” isn’t a few months in. The process of finding cofounders (especially ones critical to the company) takes months anyways. I think your equity should be close to equal if you’re taking on the same risk in terms of your time. Instead of measuring it by time spent on the idea to date, equity should be a combo of a) how essential the hire is and b) the risk they are taking by joining. In this case, you have two founders that can’t built the product they are pitching - so their technical cofounder is critical. Also I think part time/ full time is a big consideration. Who is taking on that risk of not having a pay check? I think these are the convos you should be having re your stake, not measuring it with a couple of months of fundraising prep

Dalia224·Aug 20, 2020

Thanks for sharing your thoughts. I agree, the hard work is ahead and the few months behind us won’t matter in a few years time. Their argument is that they could theoretically close the round now and there would be an inherent valuation of the company when I join and therefore not possible to give me equal stake but I know it’s BS. Regarding salary, they’re planning to use the preseed round to pay the founders a livable wage. But your other arguments still hold.

claudialamb·Aug 20, 2020

There's a great little book called 'Slicing Pie' by Mike Moyer that might be worth a look. It's an easy read... also, I completely agree that 'late' is NOT a few months in! If it becomes a sticking point and you're under no time pressure, let them close the preseed round (it's a bit harder to do without a tech lead)...https://www.amazon.com/Slicing-Pie-Handbook-Perfectly-Bootstrapped/dp/0692584625/ref=sr_1_1?crid=2ONU0M7ON1WMG&dchild=1&keywords=slicing+pie+book&qid=1597938944&sprefix=slicing+pie%2Caps%2C165&sr=8-1

Carl15·Aug 25, 2020

In my opinion, they are showing a stingy/greedy mindset that will follow you throughout starting a company with them. I’d walk and find cofounders who get that the idea isn’t the thing. Execution is the thing!