Air is committed to making all full-time employees equity holders in our business. We recognize the risk our team has taken by choosing to work at an early-stage startup, and we want them to be invested in our success and compensated when the business grows. Equity can be difficult to understand and value. This document aims to clarify how equity works at Air so employees can make informed personal financial decisions. This document is a brief overview of how equity works at Air. It is by no means all-encompassing or legally binding. You must read through your equity agreements, consult with your financial and legal advisors, do your research, and ask questions.
Air offers equity to each full-time employee in the form of "options." The number of options an employee receives depends on their level of seniority, the stage of the business, and their risk tolerance when trading off cash compensation. Employees are eligible to receive additional equity issuances in the event of a promotion or exceptional performance. These additional issuances are typically considered at each employee's anniversary with the company.
Our equity packages come with a few standard terms: 4-year monthly vesting - This means an employee has to work at Air for 4 years to be able to exercise their full options package. Each month they are employed, they "vest" an additional portion of their equity. 1-year cliff - This means that if an employee leaves Air within their first year of employment, they forfeit the right to exercise any of their options. 90-day post-termination exercise window - This means that an employee has 90 days to exercise their options after their employment with Air ends. Additional reading on equity vesting, cliffs, and PTE windows can be found here and here.
An option is the right to buy a stock at a fixed price. That price is usually the market value of the shares when they’re granted to you. This price is set by a 409A valuation and is often called your "strike price," or "exercise price." At Air, we offer Incentive Stock Options or ISOs. Some startups offer NSOs or RSUs. You can read more about the differences between those here.
Estimating the value of your equity is difficult because it depends on the future value of the company, which is unknown. However, if we assume a 20% dilution per future fundraise, we can calculate a projected share price based on potential company valuations and required fundraises to get there.
There are a few ways in which startup employees can see liquidity from their equity:
Ready to join the team? Check out our careers page to view all open roles and learn more about life at Air.