Startup employees - you're probably not going to stay to the end of your 4-year vesting period.
Only about 4 in 10 employees will make it to the end of their initial equity grant (which is almost always a 4-year grant with a 1-year cliff).
And in recent years, turnover has been markedly higher.
Chart below shows the cumulative percentage of employees who left their startups from a given hiring class, defined by the year they were hired.
You read the chart left to right along the year. For instance, this shows that for employees hired by startups on Carta in 2019, 52% of them had left the company within 3 years.
We added a few red highlights on the 2021 and 2022 classes because turnover (both voluntary leaves and layoffs) is just so much higher than prior years. Nearly 1 in 4 employees hired in 2022 left before a full year!
Of course much of the increase was driven by major layoffs across startups. Those have thankfully gone down (though not fully disappeared). I do expect the 2023 and 2024 hiring classes to look more like 2018 or so.
In a typical year (say 2018), about 20% of departures were through layoff or firing and the rest were by choice. In 2022 it was basically a 50/50 split.
𝗪𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗶𝘀 𝗺𝗲𝗮𝗻 𝗳𝗼𝗿 𝘀𝘁𝗮𝗿𝘁𝘂𝗽 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀?
1. Plan as though you won't make it through your full vesting period. This means you should expect to be faced with a decision to exercise your equity when you leave.
2. That decision point will likely be a 90-day window. It may be worth saving cash over time in order to make that choice less acute on your day to day finances.
3. Don't take a loan out to pay your exercise costs. In a few cases this works out great, in many more it is a real burden.
4. Dig into the specifics! What was the strike price on your initial grants? Where is the FMV now? How has the company valuation changed over time with additional fundraising?
Startup life can be amazing but it also changes quickly. Hopefully you joined the right rocketship, but plan ahead in case that's not true.
#compensation #startups #startupemployee
Lots more data on startup compensation and hiring out tomorrow in our State of Startup Compensation report - sign up here: https://lnkd.in/gNa_Dk-F
DISCLOSURE: This communication is on behalf of eShares, Inc. dba Carta, Inc. ("Carta"). This communication is for informational purposes only, and contains general information only. Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. © 2026 Carta. All rights reserved. Reproduction prohibited.
