How big is an early employee equity grant
The equity you give your first employees sets the culture of your cap table. Here is what early employees usually receive, how vesting works, and where the mistakes hide.
Give too little and your first hire leaves the day their offer from a bigger company arrives. Give too much and you've handed a piece of the company's future to someone who hasn't built it yet. Early employee equity is the least-documented, most-felt part of the cap table — and it's where founder regret lives.
The realistic numbers
The range for the first few hires in a typical startup looks like this:
- First engineer: 2–5%, depending on salary level and how much the company still relies on them
- Early general hire (marketing, design, ops): 0.5–2%
- Later seed-stage hires: 0.25–1%
- Post-Series A hires: 0.1–0.5%, and dropping
These numbers assume the hire takes a pay cut to join. If they demand market salary and founding-level equity, one of those wants is wrong — compensation has to balance salary against ownership, and the conversation should be explicit about which side they're choosing.
The mechanics that matter more than the number
- Four-year vesting, one-year cliff is the contract standard for a reason: it aligns with the horizon where companies actually succeed or fail — and it makes a big number affordable, because the grant is earned over years.
- Acceleration on acquisition. A "single trigger" (shares vest in full if the company is acquired) is what most startup employees deserve at small companies; founders negotiate this per hire, but founders who push hard against it signal distrust.
- The option pool. Employees typically get options, not shares. The pool is created (and diluted) before the round — which means the investor's ask for a bigger pool comes out of founder ownership. Know exactly who is paying for it before someone else's spreadsheet decides.
The three mistakes founders make
- Overpaying early. A 10% grant to the first non-cofounder hire is a legacy decision made in week two. Early salaries break the bank slower than early equity does.
- Underpaying the risk. Offer 0.5% to engineer #1 and you've solved your recruiting problem — by making it permanent.
- Never explaining it. Equity a hire doesn't understand is a retention tool that isn't working. Sit down, walk through the number, the vesting, and what it could be worth. The founder who explains the cap table clearly earns the trust the percentage can't buy.
Early employee equity is a map of your company's psychology. Grant it with the same care you spend on the pitch — the people who join early are buying the story you tell, and they deserve the version that's written down.
Frequently asked questions
How much equity should an early employee get?
Roughly 1 to 5 percent at the very start, depending on role and seniority, usually at a pre-money valuation that makes the grant worth taking over a market salary. Later hires get less as the price and risk change.
What is a four-year vest with a one-year cliff?
Shares are earned over four years, and the first 25 percent only lands after a full year — the cliff. Leave in month nine and you leave with nothing. Stay four years and the grant lands fully.
Should the grant have optionality or repurchase rights?
Repurchase rights (the company can buy back unvested or un-vested shares at cost) protect the company from ex-employees holding unwanted equity. A clean option pool and a simple repurchase right is the standard, fair setup.
What is the option pool, and who pays for it?
A block of shares reserved for future employees. Investors almost always want it created before their round closes, which means founders end up paying for it out of their own ownership — so negotiate who the pool dilutes.