Disclaimer: I’m not a financial expert, and I’ve worked only with a few Fintech startups.
I’ve run into different positions regarding equity compensation:
- Founders who want to give you equity no matter what, with the goal of bringing down costs
- Founders who don’t like to share any piece of their company and want to retain ownership
- Engineers who don’t care about equity and would take a higher salary
- Engineers who would love to own a piece of the company, even if that means taking a lower pay
They are obviously different people, with different levels of financial education, in different countries.
I’ve known consultants living in California that will only expose themselves to equity for a small percentage reduction in their fees. Their reason is not to have enough control over the company’s direction.
And “control” is the key difference here. I don’t know any founder who would give full control of their company to a group of investors or engineers.
If you are engaging in equity compensation, ask yourself the following questions: what do you really control? Do you trust you or the other party to control whatever they control?
The future of the company, and your equity’s value, are in the hands of the people who make the decisions about the company’s future.
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