Before I get on my soapbox and begin waving the women-can-do-all-things flag I would like take a breath and point you all to some well thought-out advice.
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I was hopping around the web as one does on a Friday morning and I picked up this piece by Kathy Leake, Co-founder and President of LocalResponse, on AllThingsD. Based in New York’s emerging startup scene in trendy Chelsea, LocalResponse claims to be the first platform to help marketers respond to social intent, defined as a social media moment: a tweet, a status update on Facebook, a photo on Instagram and a check-in to Foursquare.
In her latest AllThingsD offering, Leake divulges some advice for women entrepreneurs tackling the sometimes murky world of equity.
“As more and more women begin to populate CEO and founder-level positions, and we get closer to income equality between genders, I feel it’s increasingly important that we not only understand our merited assets, but more importantly, we learn how to ink them into our contracts upfront,” writes Leake.
She highlights five key guidelines that women need to be aware of when it comes to negotiating equity so they get the highest possible stake in their company — but I think some of these aren’t all that gender-specific. So men listen up too.
Leake encourages women to fight for what they deserve.
“Your title costs the company nothing. If your role is going to include getting the company on the map, shoot for C-Level or Founding Partner. It doesn’t matter if it’s not your idea.”
Just because you’re working for a startup doesn’t mean you should get screwed in the salaries department. Get raises and bonuses tied to performance.
According to Leake, most startups pre-Series A can’t offer you a market-related salary but attempt to make up for that in equity, Although that is good pre-Series A, it might not work out afterwards.
“Begin negotiating pre-A to get you where you want to be post-A. If you are willing to put skin in the game and take a risk in joining a startup, you should also benefit along the way by virtue of your performance.”
Get some share options.
“Four-year vesting is not an absolute. Ask for some of your shares to vest earlier, so that you have ownership earlier. I recommend asking for two years post the initial year, meaning after three years your stock is fully vested, rather than four. That ownership is empowering and motivating,” she says.
Get an anti-dilution clause or you’ll be in for a nasty surprise when your shares drop dramatically. Think what happened to the other Facebook guy post-funding.
“So ask for an anti-dilution clause for, at the very least, the Series A. If you don’t, you’ll be in for an unpleasant surprise post-A. It’s possible to find yourself with only two-thirds (or less) of what you originally thought was your percentage share in the company once you have closed that first round of funding.”
Get an exit strategy from the get go. Working for a startup is a big risk — so best have a plan for when things don’t quite work out.
“You are taking a risk with your career to join a startup, so try and avoid “at will” employment. Establish a minimum term of 6-12 months guaranteed employment or 3-6 months severance.”
You can read Leake’s full piece here.
