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I've founded and bootstrapped an LLC and a friend wants to help out with development and not take an hourly contractor rate. He's aligned with the mission and wants compensation in the form of stock appreciation rights. Equity in my case is apparently given as LLC Profit Shares.

I'm aware startups typically give options with 1 year cliff and a 4-year vesting period, and equity % is given in "layers" as people join the company (first layer is founder and gets at least 50%, second layer is first round of employees and get a split of 10-20% equity, etc).

My questions are:

1) What % of Profit Shares is typical for early stage "employees" (He's not necessarily an employee at this point). I was #3 hire at a seed round startup and received 1% equity options (which seems low)

2) What are general vesting cycles, if any, for profit shares?

3) Is company control given up if profit shares are issued, or do they simply grant literally a share in all profits proportional to the % given (I.e., revenue in 5 years is $1m, he has 5% profit shares, so he takes $50,000)

  • I worked for a start up . They just blew smoke up my butt for about a year. Do you smoke? – Four_lo Nov 12 '19 at 3:49

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