What to Give Your First 5 Startup Hires in Equity

Startup founders - what should you give your first 5 hires in equity?

Here's what the data says for thousands of companies who hired their initial team in 2022.

𝗠𝗲𝗱𝗶𝗮𝗻 𝗘𝗾𝘂𝗶𝘁𝘆 - 𝗯𝗿𝗶𝗴𝗵𝘁 𝗽𝗶𝗻𝗸 𝗻𝘂𝗺𝗯𝗲𝗿𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗰𝗵𝗮𝗿𝘁

Hire 1: Median initial equity grant of 0.96% of the company Hire 2: 0.44% Hire 3: 0.25% Hire 4: 0.20% Hire 5: 0.18%

Of course using medians only for this analysis would obscure a lot of important detail. So I broke out the data by the bubble tiers as well.

Read the bubble percentages across each row (eg. 30.9% of Hire 1 employees received 1%-2.5% of the company in their initial equity grants).

𝗦𝗼𝗺𝗲 𝗺𝘂𝘀𝗶𝗻𝗴𝘀

• Seems like the conversation for first hires is significantly different than the rest of the top 5. Wider distributions and much more top-heavy.

• What is going on with the 0.75%-1% tier? Very few first 5 employees have their equity grant fall here. Just a quirk of negotiation, maybe?

• The fall off in equity happens rather quickly. Hires 3, 4, and 5 all receive less than half a percent of company equity most of the time.

A few data caveats to keep in mind here. First, we excluded anyone with a grant of 5% or more (we consider that founder-level equity). Second, we don't know anything about equity refreshes here, this is just the value of the full 4-year initial grant. Third, this data skews towards Silicon Valley for location and SaaS for sector.

So much nuance in these initial hire conversations. How much salary is necessary? Are they bringing technical chops to a non-technical team? Do they bring connections that supercharge growth beyond their work? It's an art, not a science.

Happy hiring!

More data on startup compensation out this week in our Data Minute newsletter, link in first comment.