• August 2019
    M T W T F S S
    « Jul    
     1234
    567891011
    12131415161718
    19202122232425
    262728293031  

What is a reasonable amount of equity to be offered as a first employee for a startup that has two founders?

Many answers to this question attempt to give specific numbers or percentages. Without an in-depth look at your company, it is impossible to give you a set answer. However, there are a number of factors that you may want to consider when weighing salary versus equity for a potential first employee.

Type of business: It is important to consider the norm in your specific lane. A new employee at a tech startup will be more familiar with accepting equity in general than some more conservative industries. You’ll want to know what the competition might be offering, too.

Type of employee you seek: While we are not allowed to use age at all in the hiring process, there are aspects about age that may help or hurt depending on the package you create. You clearly have a high opinion of the first person you want to be the first full employee of your company. If you are looking for someone with lots of experience, they may have a family and be used to a large salary. It may be too risky for this person to take equity instead of the high salary they are accustomed. However, someone young and right out of school may be able to take a bit more risk with their salary package and accept more equity.

There really is no right or wrong answer to this question because what matters most is what you can actually afford. The viability of the plan trumps any percentage or level of fairness. An article that further addresses this issue.

It is likely wise to discuss the specifics of this new hire and your company’s equity with a seasoned startup attorney. LawTrades can help out with this.