Thank you for taking this IV-part journey together to learn more about FinTech jobs.
Part I discussed how to define FinTech and find your place in the 19 different FinTech sub-sectors. Part II showed you how to create a target company list that will welcome you. Part III covered the job roles where you can more easily use your transferrable skills.
We now turn to Part IV: expected compensation. The real punchline is at the end. However, please don’t skip since that will hurt my feelings.
How about compensation?
Please note the compensation levels expressed here are based on my client’s offers. If you want to be fooled by bad data, please go to any job board.
It’s amazingly simple. Less in the short term, much less. Higher in the long term.
For those expecting Director or MD level bases, you may not be happy with what you read. I don’t create the numbers, just report them.
Working on Wall Street, as a mentor once explained, is the only place to make outsized returns in return for putting $0 capital at risk. Let’s hold aside the human capital cost of working on the Street including hours, travel time, etc. I mean your own cash.
Since most FinTechs are conserving cash, even those post IPO, you will see more of a higher upside, lower base.
Series C or later round FinTechs
For a senior-level executive at a Series C or later round FinTech, cash compensation will rarely exceed $200,000 and may start lower. However, the upside is unlimited. How long and if you get the upside is unknown.
To calculate the exact option value of deferred comp working at a FinTech, take comparable public stock volatility, stress to 3 standard deviations, pump into Black Scholes, then run through the best artificial intelligence out there and you get:
No way to tell!
The best chance to increase your odds is to join a company with a founder with a long track record (i.e., Thiel, Musk, Bezos, etc.)
Compared to a Series C round or earlier FinTech, your chances that your deferred compensation are diluted beyond your contract terms is generally lower. What do I mean?
You negotiate and put into your contract the ability to purchase 10,000 shares at $1 per share. If your FinTech is not doing well, new money asks for a larger % of the pie and you could have fewer shares or most likely, a higher purchase price.
It’s another form of inflation.
Series C round or earlier FinTechs
Given the greater need to conserve cash, your base can easily drop, and your deferred compensation should increase accordingly. Your base generally falls to $150,000 or lower. Your time to a liquidity event (IPO or its equivalent) increases.
The probability of your deferred compensation becoming diluted increases. Since the company generally needs capital, you have no idea what future investors will demand.
It doesn’t matter if your contract has anti-dilution clauses. New money rules the day. I have known many professionals that take massive dilution hits when their company is in trouble. A smaller percentage of something is better than a larger percentage of $0.
Your risk-reward trade-off becomes more logical than your Wall Street position. Before entering into a compensation agreement, network, network, network to find compensation packages of professionals at similar FinTechs. How do you network to find this information? Check out my Networking Blog.
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