equityI just received an offer with a competitive salary (higher salary than other offers I received). There is equity involved, but the startup isn’t disclosing the total number of outstanding shares/my percentage.
Is not disclosing outstanding shares/my %age a red flag? Why would a startup choose to do this?
Yes, that is a red flag. The number of shares you are receiving is meaningless without knowing the percentage. I would push back on this.
On the other hand, if it is a good salary, then maybe you don’t need to care so much. You are probably getting a very small percentage of shares (otherwise they’d be more open about it), and the likelihood of them ever being worth anything is small (a high percentage of startups fail). So you can be happy with your good salary, have a good experience at a startup, and might get a bonus someday via the shares.
Not enough information to tell. I am nowhere near an expert but I can tell you that for a startup that is making the same offer to candidates for other job positions that they are making to you, or contemplating using stock to raise capital, or still getting their top tier people in place, knowing the number of shares and the precise status is not always simple.
They should however be able to give you a sense if they already have a formula or criteria for how stock/ownership will be allocated. Asking the question as if you are just curious might elicit a response that would give you a reading on how sincere they are.
It’s a bit of a “cart before the horse” scenario. As a private company, I believe that you wouldn’t be entitled to know the number of shares or share value unless you are a shareholder. I am not sure about this, it’s more intuition. I would also think that unless you are being brought in as an executive and/or would like influential power in the company’s general strategy the % of total shares is not as important as the value of the shares and the potential for that value to grow. If you are in a position to assert yourself, you can pursue the information you want. Certainly, once you are a shareholder, you are entitled to know about your stake in the company.
I also would reiterate what Jeff O’Neill’s answer say, that the concrete opportunity is tied to the salary offer. Stock value can rapidly grow, but it is associated with a high risk of failure. Not to dissuade you, but if you have a low risk tolerance or are in need of financial security, I would focus less on the stock offerings initially, and more on the salary and benefit being offered (it is unclear if you are saying the offer is higher in part because of the equity, or based on salary alone). This will also help in doing a more fair comparison to other offers in perhaps more established organizations. If you have a high tolerance for risk and see a potential for the company to be successful, more power to you.
I think its a not a red flag. Companies and governments today are very sensitive about information. From the workers perspective it just requires a bit of blind faith, but corporate and political leaders today are very responsible people and I am sure they know what they are doing.
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