When negotiating and receiving job offers from a startup, determining the value (or potential value) of equity is one of the biggest challenges. There’s a decent amount of content about entering this negotiation as an engineer and what ranges of equity to expect, but much less so for marketing hires. Below I’ll lay out a couple of examples that are loosely based on people I know or my own experiences.
You join a SaaS company that makes sales/marketing tools as the 4th marketing hire, 50th employee, and first director-level marketing hire. You have solid experience experience working with startups and have lead the marketing efforts of a startup that had a very successful exit. The company offers you a slightly below market salary (around $115k) and .9% equity. They raised an A round of 12 million before you joined, then over the next 2 years after you join they raise a B round which dilutes you by 40%. 2 years after the B round they are acquired for $200 million. Your equity would be worth:
.9% x 3/5 = .54% .54% of $200 million = $1,080,000
Assuming you leave right away with all your equity (probably unlikely), your equity will have equated to roughly $270k/year, making your salary about $380k over those 4 years (not too bad).
You join an enterprise SaaS company as the 1st marketing hire and 10th employee. You are mid-level in your experience but have a good track record and the company offers you a market salary (around $85k) and .2% equity. They have only raised a seed round before you join, then over the next 2.5 years after you join they raise an A and B which each dilute you by 25% and 33% respectively. Six months after the B round they are acquired for $100 million. Your equity would be worth:
.2% x 3/4 x 2/3 = .1% .1% of $100 million = $100,000
Assuming you stay that extra year and get the entire $100,000, your equity will have equated to roughly $25k/year, making your salary about $115k over those 4 years.
You join a real estate technology company as the 15th marketing hire and 150th employee in a mid-level role (email manager). The company offers you a market salary ($95k) and .04% equity. They raised two rounds of funding before you join, then over the next 3 years they raise two more rounds which dilute you by 33% each. 2 years after the D round they IPO at a market cap of $750 million. Your equity would be worth:
.04% x 2/3 x 2/3 = .018% .018% of $750 million = $135,000
You will usually have to wait at least 180 days until you can sell your stock on the public market, so assuming you do that, your equity will have equated to roughly $25k/year, making your total compensation about $120k over those 5.5 years.
I know from experience that these salaries and equity packages are somewhat typical*, but the exits I used as examples are definitely not typical. All three of these companies were extremely successful and had exits that made their founders, investors, and (early) employees a lot of money. Also because these companies were doing so well they were able to negotiate good terms on their funding and not overly dilute everyone involved. This is not typical; most startups never realize an exit and many that do return very little money.
Here is an example of a much more common scenario, an ‘acqui-hire’:
You join a company that makes a consumer mobile product as the 1st marketing hire and 12th employee in a ‘growth hacker’ role (basically an all around marketer, driving growth any way you can). The company offers you a less than market salary ($60k) and .4% equity. The company raised $4 million before you joined, then raises another round of $5 million over the next year which dilutes you by 33%. 1 year later they get acquired by a big famous company for $15 million. In this case the investors’ share is worth less than their investment, so they get to collect their $9 million before anyone else gets paid (this is called a liquidation preference). This leaves $6 million to be divvied up, and if the investors have ‘participating’ shares, which they often do, they get to take their share of this too. So, your equity would be worth:
.3% x 2/3 = .2% .2% of $6 million = $12,000
There is very little good data out there for startup salaries and equity but a couple of the better ones I’ve found are:
Angel List Salaries: these are based off posted jobs, not actual offers.
Ackwire: simple tool, all data is entered anonymously by other people.
An Engineer’s guide to Stock Options: a great post outlining many of the nuances of stock options not covered here.