How much equity do you need to grant an employee?
Employee option pools can range from 5\% to 30\% of a startup’s equity, according to Carta data. Steinberg recommends establishing a pool of about 10\% for early key hires and 10\% for future employees. But relying on rules of thumb alone can be dangerous, as every company has different cash and talent requirements.
How much equity should I give my executives?
In terms of actual percentage ownership in the company, 5\% to 10\% is a ballpark area to consider offering your potential CEO. Use the previously mentioned factors to choose which end of that range makes more sense. In addition to an actual percentage, consider also vesting timetables tied to goals.
How much employee equity should you offer your startup’s developers?
Leo Polovets of Susa Ventures suggests offering between 1\% and 2\% for a lead developer, based on data from Silicon Valley early-stage startups. Fred Wilson of Union Square ventures has posted an entire free, online class where he goes into great detail about structuring employee equity, which is definitely worth watching. What about advisors?
Do startup teams agree on their equity?
Nearly 40 percent of startup teams spend a day or less agreeing on their equity, Harvard Business Professor Noam Wasserman found, who studied high-stakes decisions at more than 6,000 startups over the course of 15 years. Of those, an overwhelming amount split their equity evenly.
What should you consider when dividing equity between founders?
Any previous business experience a founder has in building a company should be given more weight when dividing equity. Building a startup is difficult work, and any prior experience fundraising, connections to investors, creating an MVP, or scaling a product are invaluable assets that increase the startup’s chances of success.
Should you offer equity to early-stage employees?
Offering startup equity to early-stage employees makes up for that gap; motivates them to work harder, because they’re now part-owners of your company; and retains them if you choose to vest their stock over a four year period, which is common.