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Equity for non-founder startup CEO with NO salary with NO funding yet and with an MVP?

This is an enterprise SaaS product and has two tech co-founders who have been working on their prototype for the past six months. They have also invested a few thousands in hiring freelancers to expedite the development. The product MVP is now ready and I am being roped in as the business face of the company. As CEO, my initial responsibilities will include * bringing in the first beta users * bringing in new customers * finding investors * Generating revenue Other important points to consider: * I plan on taking no salary till we find investors * Both my tech-cofounders still have their day job and plan to go full-time after finding investments * I shall be putting in at least 6 hours of work every day starting now. Given these considerations, what would you think is a reasonable equity to ask? Thanks for your time.

Answers

Topic Expert
Kent Thomas
Title: Founder
Company: Advanced CFO Solutions
(Founder, Advanced CFO Solutions) |

In my experience, a non-founder CEO of a venture backed, tech startup will typically get between 5% to 10% of the business in options that vest over time or based on performance criteria. Since you are coming in before the initial investment and taking no salary, you could justify a higher range. Since you won't be full-time, your challenge will be to determine, then demonstrate the real value that you bring to the enterprise with the time you spend pre-investment. I suggest that the incremental equity be tied to you actually closing the investment, then there will be no question about the contribution made. The amount of equity that you receive will be determined by your negotiations with the founders but should not be so high as to surprise or concern investors. If you work from a basis of "win-win" it can be positive to all parties.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Agree with Kent. Since you will be doing most of the heavy lifting after the MVP, I would even say that a 40/40/20 split (assuming the 2 cofounders had a 50/50 to begin with) isnt that unreasonable.

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