The Highlights: How to Evaluate Equity Offers from Startups
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Hey y’all! My name is Kelley Griggs, and I’m the founder and host of StartupNash (my company Britepeer’s premier community).
When people ask you “who is building in Nashville?” send them this newsletter.
This special edition is out ahead of 3686. For those attending, you’re invited to our Launch Week Happy Hour. See details below.
Coming up:
📆 3686: LaunchTN’s annual entrepreneur conference is next week from September 9-11th. Need last minute tickets? Use the code AMBASS3686 for a discount. Get tickets here.
📆 Have something to launch? Join us at our Launch Week Happy Hour for Nashville Founders. It’s during 3686 on September 10th at 6:30 at East Nashville Beer Works. Invite here.
How to Evaluate Equity Offers from Startups
Lately, we’ve been talking about equity offers from startups. From the thread, I put together some resources our community shared.
Contributing members:
Jared McLaughlin
🛠 Tools:
Carta's Startup Equity Calculator: Useful for valuing startup equity and understanding benchmarks.
Autograph's Fair Offer Tool: A benchmarking tool for equity compensation.
Holloway's Guide to Equity Compensation: A detailed resource on stock options, RSUs, and equity compensation structures.
When evaluating an offer, here are some points to consider: *Disclaimer: we are not lawyers. Please consult professionals before making decisions.
Companies often use benchmark data to determine equity offers. It's important to understand the company's valuation process.
When negotiating, especially for higher roles (Director+), ask for information about how the company's last valuation was determined and key metrics since the last funding round.
Equity value is often unpredictable, especially regarding IPO timelines. It's helpful to look at the strike price versus the last round's price per share to understand the risk-adjusted value.
Unless you’re an accredited investor, treat the equity component as having no current market value during compensation negotiations. However, if you are accredited, gather investor-level data to evaluate it like any other investment.
Overall Sentiment:
Evaluate equity offers with caution, especially considering the unpredictability of IPO timelines.
Even if valuing the equity at $0, negotiate for more equity since it may hold future value.
Leverage benchmarking tools and resources to assess the fairness of an equity offer based on the company's stage and your role.
Have you met these founders yet?
JoAdel Adeola, Founder of Fathom - *Pitching at 3686
Christal Hector, Founder of TuneHatch - *Pitching at 3686
Amanda Zila, Founder of Inkbloom
Do you know about these resources?
Bankable Business Bootcamp is taking applications for their next cohort
EO Nashville is inviting students to pitch
See y’all at 3686! For members, there is a new #3686 channel in our Slack for folks going.
If you want to join these conversations or post a win, please join StartupNash.
Those are this week’s highlights. If you’d like to share ongoing updates with founders and funders on this email list, sign up to be a member of StartupNash. StartupNash uses Britepeer, a tool my team built, to connect members in our community by skill. We believe sharing knowledge through peer mentorship spreads wealth in our community. I hope you’ll consider joining us.