What’s the best way to distribute company equity?

Sam Altman (President at Y Combinator)
Employee Equity – Sam Altman

Its very difficult to put precise numbers on this because the specifics of every situation matter so much. I’ve seen some startups offer 5 or 6 year vesting schedules. To compensate for this, they offer above-market grants. Another structure I’ve seen is back-weighted vesting. For example, 10% of the grant vests after the first year, and then 20%, 30%, 40% in the following years.

What’s the best way to distribute company equity?

Ben Yoskovitz (VP Product at VarageSale, VP Product at GoInstant (acquired by Salesforce), Author of Lean Analytics)
Changing Equity Structures for Early Startup Employees

0.5-1% is just not a lot. Those first few hires – done correctly – will be so insanely critical for the success of your startup; I believe they deserve more.

What’s the best way to distribute company equity?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Sizing Option Pools In Connection With Financings – AVC

Here’s a formula I like to use. Take the cumulative salaries of all the hires you need to make betwen the current financing and the next one. Let’s say it is five employees at an average of $75,000. Then that number is $375,000. Then divide that number by the post-money valuation, in this case $5mm. That gives you 7.5%. That’s the size of the option pool you’ll need. And it is conservative because I don’t recommend giving options equal to the dol… (read more)

What’s the best way to distribute company equity?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Equity Equation

An investor wants to give you money for a certain percentage of your startup. Should you take it? You’re about to hire your first employee. How much stock should you give him? These are some of the hardest questions founders face. And yet both have the same answer: 1/(1 – n) Whenever you’re trading stock in your company for anything, whether it’s money or an employee or a deal with another company, the test for whether to do it is the same. You … (read more)

What’s the best way to distribute company equity?

Leo Polovets (General Partner @ Susa Ventures)
Analyzing AngelList Job Postings, Part 2: Salary and Equity Benchmarks · Coding VC

Equity: Hire #1: 2% – 3% of equity Hires #2 through #5: 1% – 2% Hires #6 and #7: 0.5% – 1% Hires #8 through #14: 0.4% – 0.8% Hires #15 through #19: 0.3% – 0.7% Hires #21 through #27: 0.25% – 0.6% Hires #28 through #34: 0.25% – 0.5% These ranges indicate the maximum equity amounts offered by companies.

What’s the best way to distribute company equity?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Employee Equity: Too Little? – AVC

Since I started in VC, the percentage of a company that non-founder employees owned was always in the 15-20% range after the team is fully built out. In recent years, I have seen that number creep up to the 20-25% range and if you extrapolate current trends out a few years, it could easily be 30%.

What’s the best way to distribute company equity?

Joel Spolsky (CEO @ Stack Exchange)
How much equity should a partner with a short-term commitment be entitled to? – Startups Stack Exchange

The most important principle: Fairness, and the perception of fairness, is much more valuable than owning a large stake. Almost everything that can go wrong in a startup will go wrong, and one of the biggest things that can go wrong is huge, angry, shouting matches between the founders as to who worked harder, who owns more, whose idea was it anyway, etc.

What’s the best way to distribute company equity?

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.)
The Option Pool Shuffle – Venture Hacks

Title Range (%) [for after raising a Series A] CEO 5 – 10 COO 2 – 5 VP 1 – 2 Independent Board Member 1 Director 0.4 – 1.25 Lead Engineer 0.5 – 1 5+ years experience Engineer 0.33 – 0.66 Manager or Junior Engineer 0.2 – 0.33

What’s the best way to distribute company equity?

Joel Spolsky (CEO @ Stack Exchange)
How much equity should a partner with a short-term commitment be entitled to? – Startups Stack Exchange

Here’s the principle. As your company grows, you tend to add people in “layers”. The top layer is the first founder or founders. The second layer is the first real employees. For many companies, each “layer” will be approximately one year long. By the time your company is big enough to sell to Google or go public or whatever, you probably have about 6 layers: the founders and roughly five layers of employees. Each successive layer is larger. Ther… (read more)