What’s the best way to distribute company equity?

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

For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. Getting someone to join your dream before it is much of anything is an art not a science. And the amount of equity you need to grant to accomplish these hires is also an art and most certainly not a science.

What’s the best way to distribute company equity?

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

Here are our default brackets: Senior Team: 0.5x Director Level: 0.25x Key Functions: 0.1x All Others: 0.05x Then you multiply the employee’s base salary by the multiplier to get to a dollar value of equity. Let’s say your VP Product is making $175k per year. Then the dollar value of equity you offer them is 0.5 x $175k, which is equal to $87.5k. Let’s say a director level product person is making $125k. Then the dollar value of equity y… (read more)

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.)
Are founders really 1000x more valuable than employees? – Venture Hacks

Is it fair for founders to own about 100% of a startup while employee #1 only owns a few percent? Are founders 10-1000x more valuable than employees? The answers are: Yes, it is fair. Value doesn’t matter, timing does. When the founders start the company, it is worth approximately $0. So their equity is worth $0. Let’s say the founders work for 6 months, make progress, and then raise money at a $10M post. Then employee #1 joins and gets 1% of the… (read more)

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