With similar funding, I've given 5% reverse vested shares to a tech employee. It created vast incentive, and if he stays with the company for 3 to 4 years, he certainly earn the 5%. I also gave 7% to a key tech employee before...no regrets.
How much did that 7% end up being worth, and how long did the company last? Those two factors probably play a large role in how much you regret issuing them. If the company came to nothing, or if you gave up 7% and the company exited before it needed new management or a large number of employees, sure, maybe you don't care. Pick a number out of a hat!
That company ran for 8 years. We had great revenues and shared the wealth relative to ownership, but there ended up not being an acquisition. During the high times and opportunities of acquisition, I never thought "I wish I had given up only 2% instead of 5%". I always knew that if we needed to dilute the holdings to take on a new CxO we could do so and all would be ok. I was careful to explain to people that if we grew by leaps and bounds dilution would occur, so get comfortable that your X% will get reduced.
Comments
With similar funding, I've given 5% reverse vested shares to a tech employee. It created vast incentive, and if he stays with the company for 3 to 4 years, he certainly earn the 5%. I also gave 7% to a key tech employee before...no regrets.
How much did that 7% end up being worth, and how long did the company last? Those two factors probably play a large role in how much you regret issuing them. If the company came to nothing, or if you gave up 7% and the company exited before it needed new management or a large number of employees, sure, maybe you don't care. Pick a number out of a hat!
That company ran for 8 years. We had great revenues and shared the wealth relative to ownership, but there ended up not being an acquisition. During the high times and opportunities of acquisition, I never thought "I wish I had given up only 2% instead of 5%". I always knew that if we needed to dilute the holdings to take on a new CxO we could do so and all would be ok. I was careful to explain to people that if we grew by leaps and bounds dilution would occur, so get comfortable that your X% will get reduced.