What a 1.2% job offer really mean in a 4 people startup that got their first VC round?

I was offered a job at a very small startup. They have just started a year ago. 4 founders started the company together. I'm going to be their first hire. They offered a "pay the rent" salary and 1.2 percent of company. Obviously it's not preferred stock and it's subject to delusion. Company has raised first and only round of $1.5M. It's in term on "convertible note" with limit of $8M for investor. Because of very niche market that company is targeted it's not going to be next WhatsApp or Groupon. If they do it really good they might be worth something between $10M to $50M. There is no way that this company become a $100M company. Let's say this company will be sold $20M in two years. How does that translate to real dollars in my saving account by then?

1.2% equity seems fair if the startup already has the product built (as you said they started a year ago) and they have already raised $1.5M in funding.

A few things to keep in mind that you are likely on a vesting schedule (most startups use 4 years). So your 1.2% will vest over that term. There could likely also be a 1 year cliff involved in they are smart. Check the paperwork to verify this.

If investors are willing to put in $1.5M in a startup, they see the potential. I would not say that the startup isn't worth it if you feel they won't be the next WhatsApp or Groupon.

The key thing you should ask yourself is do you believe in the product and vision enough to stick around for a few years?

Also, if you are taking a lesser salary in order to get more equity, do ensure that the salary covers all your living expenses at the bare minimum.