How Much Equity Should You Give Your First Startup Employee

Heads up, founders - here's how much of your company to give your first employee.

After bringing together the founding team, this first hire moment can be a tricky negotiation. You only make the first hire once, so data can be thin on the ground.

Before we go further - if you want this equity data for the first 10 hires, not just hire 1, download the equity addendum at the bottom of our new Carta compensation report: https://lnkd.in/g2dM-HbG

So first hire equity! More art than science here, but these benchmarks should set the terms of the discussion. Note that this data references US startups only.

The median first hire at a tech startup receives just a smidge less than 1% of the company. That's the fully diluted percent of company equity in the initial grant (almost always a 4-year grant).

Benchmarks

10th percentile: 0.11% 25th pct: 0.32% 𝟱𝟬𝘁𝗵 𝗽𝗰𝘁 (𝗺𝗲𝗱𝗶𝗮𝗻): 𝟬.𝟵𝟲% Average: 1.27% 75th pct: 1.91% 90th pct: 3.21%

Off the bat, it's obvious that this is a wide range of outcomes. So much depends on the founding context. Is this first hire technical and the founding team non-technical? Probably on the higher end.

Is this first hire well-known to the founders or a stranger? Do they bring fundraising capability? Are they highly networked in the chosen vertical? The considerations are endless.

Hope this range can give both the founders and the would-be first hire a basis from which to build the right comp package.

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