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Any tips for reducing my risk from an equity cliff when joining a startup?

I’m considering becoming the first technical hire at a funded startup. The offer includes significant equity, but it comes with a typical one year cliff. While this cliff may make sense from the founder/investor point of view, I’ve actually been burned once now at another startup because of it.

In that situation, I also joined as the first technical hire and was let go just a few months later with no equity to keep. In meantime, I had put my life completely on hold for this startup and worked my ass off for those few months for almost no pay. I really don’t want to put myself at risk of being in that situation again, so I wonder if anyone has an idea for how to mitigate that risk?

  • Don’t accept an unreasonable paycheck. Options, cliff or not, are just icing on the cake. Don’t expect them to have any value. Usually they don’t, as you already found out.

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  • Ask for the vesting to start immediately prorated on a monthly basis over the first year, with an initial up front grant for coming on board.

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  • Its been said in previous comments but if you’re getting underpaid, don’t accept a clean cliff. Either they pay you market rate and you get a cliff, or you get paid under the market rate and you get some sort of equity vesting without cliff.

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  • Yeah, accepting that deal was obviously a huge mistake in on my part in retrospect. I was fooled by “standard” documents and thought it wasn’t negotiable. Will definitely discuss a more appropriate arrangement this time around. Thanks everyone!

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  • I would attempt to negotiate for pro-rated vesting first and if that failed, a perk with actual cash-value for you prior to the vesting. E.g., 50% coverage on spousal health care, monthly transit card, paid meals after 7PM, something.

    If the company rescinds their job offer when you attempt negotiation, you don’t want to work there.

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  • How did they get funding without a tech resource in the first place? Just on the biz plan and connections? If so, that’s another reason to follow the advice above and insist on gradual vesting and a good paycheck.

    Maybe you care telling us how the funding went down…

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