Negotiating Equity in Recent Launch
Hi all. Joined a newly launched tech fund a year ago with assets <$500M. Performance to date has been okay but given the recent drawdown I'm not expecting a bonus this year. Overall I believe in the strategy and think over the long term the fund will be successful so I've been thinking of asking for equity in the fund. Frankly I would prefer this over a cash bonus (I'm very bullish on the strategy). I'm wondering - is it unprecedented to ask for equity in the fund in lieu of a bonus ever? And at what level of seniority is this okay? What percent of the carry pool would be an acceptable ask? Keep in mind the investment team is just the founder and myself. Thanks in advance for any thoughts.
Always ask for equity
One of the golden rules to joining a startup is to ask for equity before you join. If you didn't, the sooner you ask the better.
The issue with waiting is if the fund does well and grows, your chances of getting equity decline as it becomes more valuable.
You also listed AUM was under $500MM, that's a wide range. The value (and likelihood) of equity at a $50MM fund and a $400MM fund varies drastically.
Yeah I dropped the ball not asking when I first joined but it felt inappropriate at the time given I’m a pretty junior analyst.
I’m thinking this upcoming bonus discussion may be one of the last opportunities to get it though. I think I’ve gained a good amount of good fortune over my stint here so far…
What’s a reasonable range of equity to ask for on a 4 person team with $200M in aum?
5%
So a senior analyst would only make $200k bonus? (assuming 20% fees, which is unlikely)
5% would be for a junior person.
I would say 5% for relatively jr analyst and up to 10% for senior. So assuming 10% return, yes, $200k for the former and $400k for the latter.
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