| tl;dr - It sounds to me like you're being taken for a ride. From what you've said, it sounds like: 1) The company has no tangible or intangible assets (no money, no viable product, no significant physical assets, no distinctive IP). 2) The company has existing liabilities (existing full time employment contracts that would have a cost to exit, maybe some rental agreements too). 3) Passive shareholders hold ~35% of the equity. 4) Two employees hold 50% of the equity, without any vesting conditions. These conditions sound like you're starting a company from scratch, except with some extra weight on your back. There are some problems with what's been proposed to you: - ESOP rather than shares: usual things to watch out for with ESOP: what is the strike price, what is the vesting period etc. I've seen offers that included stock options which would mean negative cash flow for the employee (i.e. cost to exercise the options over 4 years is more than the salary over 4 years). - Even if they gave you shares instead of options, they're offering you a smaller cut (5% instead of 25%) AND their shares aren't subject to vesting but yours are! Perhaps there are details I've missed or that I've guessed incorrectly. But if someone offered me something like this, then I'd make a reasonable counter-offer (worked out from scratch from the objective facts, not based at all on their offer). If they were to act shocked or otherwise indicate my counter-offer is far off what they would be willing to agree to, I'd shake hands and walk away. |