Compensation Packages in Venture-Backed Companies

You’ve been offered a job at a startup. The folding tables look romantic, the smell from the Chinese restaurant next door isn’t too annoying (yet), and there is a plunger in the one bathroom. The founders tell you that cash is tight but they are having lots of meetings with VCs and a financing is just around the corner. What should you expect regarding compensation?

Of all the questions that we’ve gotten, the most popular have been surrounding compensation. It runs the gamut from “how much do you pay X” or “how do VCs feel about deferred comp” or “what are standard compensation terms.” Given all of the interest in what cash and equity compensation is, we’ve decided to create a series of blog posts to address the issue. This series isn’t just for employees, but also founders. If you’ve been a regular reader of Brad’s blog, then you’ll know we’ve partnered before in discussing such topics such as Term Sheets, Letters of Intent and 409A.

As with all of our series, but probably even more so here, please take our opinions as just that – our opinions. There aren’t “right” or “wrong” answers here, every case is special, your mileage may vary, etc. There are many factors that go into determining compensation packages – it would be inappropriate to simply print this blog series, take to your next board meeting and demand a raise (especially if you work for a company we are an investor in.)

Over time we will publish individual posts on particular topics concerning compensation, including such scintillating missives as “compensation by job title” and “advice for paying outside board members and advisors.” If at any time you’d like to read or print the entire series as one post, check out the “Download Our Content” feature on the upper right of this frame.

We hope you enjoy this series and welcome your comments. If there are areas that you think deserve their very own series (say – like “Angel Investing” which we are currently working on) please suggest them to us.

– Jason and Brad