How Much Equity Do the First 5 Hires at a Startup Receive

Founders - how much equity do the first 5 hires at a startup receive?

It's a tricky subject without much available evidence—so we reviewed the data from nearly 5,000 employees that were hires 1-5 at early startups in 2023.

First point of debate: at what point do you call an equity grant "founder-level" equity?

Many people say that anything over 5% ownership should be lumped in with the founders, even if their title doesn't reflect that. Other folks say 10% is a better threshold.

So the data below shows both!

Each hire number is broken out into 25th, 50th, and 75th percentile equity at each threshold (5% or 10%). The sample size is on the far right (again this analysis only includes US hires made in 2023).

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• The threshold really matters most for the first hire. The difference between 1% and 1.5% as the median is quite significant - and makes it clear that this first hire is more an art than a science.

• Only 7% of hires in this early cohort received 5% or more of the company.

• Equity grants fall off very quickly. The median first hire receives between 1-1.5%, while the median 5th hire only gets 0.31-0.34%.

• Hard science industries like Biotech and Energy tend to have slightly higher equity benchmarks than SaaS or Fintech - but it's not a huge difference.

• Founders adding their first 5 employees in 2023 were on average more generous with equity than those that hired in 2022, with the benchmarks bumping upwards for all 5 first hires.

Be sure all of these hires have a vesting schedule with their equity! The 4-year vesting period with a 1-year cliff is still the standard.

Please share with a hiring founder - and check out the link in graphic for a lot more data on hiring and comp in our full State of Startup Compensation report.

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