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Say you're an early employee at a startup, and have been granted stock options (representing under 1% of equity). How should you approach the topic of pay raises?

Should you just ask for a small bump, to cover inflation (say a 5% raise)? Should you wait until after a funding round closes? Should you accept more equity instead of cash?

I'm interested in general strategies of negotiating this balance between cash compensation and equity.

Edit: Unlike the other questions, I'm interested in how one should approach ongoing compensation in the context of of a startup that grants you stock options, rather than in general.

Futon
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    A 5% raise isn't exactly a small bump at most companies. The current inflation rate in the US is only about 1.9%. – Seth R Mar 30 '19 at 17:01

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Say you're an early employee at a startup, and have been granted stock options (representing under 1% of equity). How should you approach the topic of pay raises?

I've worked at many startups. Whenever there was sufficient funding, I've always gotten raises. Whenever there wasn't sufficient funding, I knew about that before I joined.

You should approach pay raises exactly the same way you would have if you hadn't received stock options.

If others are getting raises, then you ask for whatever raise you determine you deserve. If others aren't getting raises (perhaps because the startup lacks proper funding), then you don't ask for a raise.

I consider stock options as a bonus. They aren't a substitute for salary.

You may find that the company is short of cash and isn't giving regular raises, or is giving just minimal raises. Adjust your approach accordingly.

Joe Strazzere
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You can always ask for a pay rise if you feel you need and deserve one, but don't expect that the company will be able to oblige you.

Also, don't pin any hopes on that 1% of equity. You're in a startup - most of which fail. If the startup goes through a couple of funding cycles (usually because they can't make a profit), you'll see your equity diluted. If the company becomes successful, you'll find that the company has some way to make your 1% impossible to cash out. (been there, done that).

We can't tell you what to do; all we can say is that you should look after #1 (everyone else will be)

PeteCon
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You won't get a raise at a startup under most circumstances. Startups need cash badly. They need it so badly they sell parts of the company off to get it every year or two. They don't have it to give out in raises. You might get one right after a round if you threaten to leave, or if the boss is afraid of mass defections. That's about it (exception: if you're at a unicorn. But I'm assuming a normal startup).

The theory is that you have equity, and the increase in value of that equity (plus the other benefits of startup life, like less politics) is enough to offset the additional money you could make elsewhere. If it isn't, honestly you shouldn't be there. If you're going to try for more, you may be better off asking for additional equity- equity is cheaper than cash. Or asking for some perk you want.

But if you expect annual or regular raises- stay away from startups.

Gabe Sechan
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