Get more equity as a startup employee (without negotiating)
Email your CEO the below:
"Hi <CEO first name>,
I am bullish on what we are building together.
I want to have 10% of my after tax payroll automatically deducted to invest in the company on a recurring basis.
I am proposing the following terms for your thoughts:
MFN clause: Yes
What is the best next step to explore implementing this?
Note: you can change 10% to whatever % you feel comfortable with
Note: This is not a compensation decision by the employee/company. This is an investment decision by the employee into the company. The SAFE would purchase preferred shares. The employee should also not factor this into their salary/options tradeoff as options are to purchase common shares at a very different price from preferred.
Employees win because
1) They now get access to more equity
2) Increased incentive alignment will drive more engagement at work
CEOs win because
1) Each dollar an employee invests is a dollar the CEO doesn't have to raise in the next round.
2) This lowers pressure on issuing from the options pool
3) This maximises alignment since employees will now have common and preferred shares
1) CEO or HR/Finance may say this is too hard to set up.
They can generate a SAFE from their cap table management system. HR/Finance can coordinate signatures for SAFE docs.
There are ways to automate this process over time. The company's cap table management system account manager may be able to help.
The incentive alignment and talent retention benefits more than make it worth it.
2) CEO says that this wouldn't be fair to other employees
CEO can also give other employees this option. This should be a company wide program.
3) CEO says this is only for accredited investors
Double check the following with counsel. You may fall under the knowledgeable employee or corporate officer exemption. If not, ask for a raise to qualify you under the income rules. If they reject your request for a raise, make yourself more valuable or leave for another role.
4) CEO says no and will not elaborate why
You are either not valued, the company doesn't understand incentives, or both. Your best option is to find another role elsewhere.
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