If you're bringing a CMO into a startup, what % of the company do you offer?

by Birth_Write. Posted on Sep 11, 2020    0    5

The company generates a small amount of money. But we'd rather bring someone in and give a % to guarantee sales. What's fair?


Tiamatisus 1

I'm a former CBDO and it always depends. What is your revenue and what growth would you expect from that person? Do you already have a process or he/she needs to develop it from scratch. I would say between 1 and 15% of the company in equity after a testing period.

Memovox 1

It depends a lot on your overall strategy and how much you have liquidity, also your company size and current cap table matters. In small companies with clean equity tables we are talking anything from 1-15% depending on the stage of the company. In a +10 person company we are talking perhaps .5% to 1%. But it's always case by case.

Example: If you are a company, generating profit to a point you are able to actually pay a competitive salary, then equity should be used to commit a person to your company for the next 36-48 months through vested options.

Keep in mind, not all CMO's end up working out and you will often see the first results only after 6 months plus.

If you have the opportunity I'd make a trial contract for 3-6 months, which converts into a full-time opportunity with options after that if you proceed with the employment.

It's a small hedge against bigger issues which might appear.....

Lovetealifeyoga 1

Commission size depending on products, plus share depending on team, investors, and so on. Negotiate accordingly. Mighty luck

podcastjon 2

Am a former cmo. I saw ranges of .5 to 1% and usually on the lower end.

betilfan 2

Yep, totally agree here. You also need a reasonable vesting period (typically 3-5 years) to ensure the equity is not released to them if they do not perform.