InformationWeek
Defining The Business Value Of Technology
March 19, 1999
I have been approached to join a startup company as the # 3 man. I will be the VP of technology
or such, basically responsible for building the entire software product. I am looking for advice on
how much equity/options I should request. So far the venture firm has taken about one-third, and
I don't know how much the two founders have. It's a great deal of responsibility--the entire
company is relying on me. Do you have any advice how to proceed?
I am a proponent of these kind of opportunities and personally sit on an advisory board of a
pre-IPO E-commerce software company. First, you need to find out how many outstanding shares
exist and when the next round of financing will take place. Every round of financing creates
dilution. It's extremely attractive to enter before the second and third waves of dilution. As a
round-about suggestion, 2% of the company would be attractive and 1% acceptable, particularly
if your role is as critical as you suggest.
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