Equity distribution

How much equity do you give a qualified front-end developer UI/UX?

Emmanuel Colliot Co-founder @ TeacherSherpa

April 19th, 2015

I was wondering what the appropriate amount of equity is to give a UI/UX seasoned graphic artist/front end developer?


We are in the early stages of launching TeacherSherpa and have found a experienced/talented UK

I/UX front end developer.

In terms of equity, we're thinking 5% - since it somewhat of a founder role with no salary for the next several months.. Is that a high or low number? 

Mike Moyer

April 19th, 2015

The answer is you always give a UI/UX designer what you give every other participant: exactly what they deserve to have. You never want them to have too much and you never want them to have too little. They should always have the right amount of equity.

5% is a guess. Even if you are lucky enough to guess right, the moment something changes (and things always change) you will be wrong.
 

Contrary to what most people think, determining an exactly right equity split is not that complicated. You use a dynamic equity model. I've designed a model that always produces a perfect split. It's called Slicing Pie and I've written a book on the subject. If you contact me through SlicingPie.com I'll send you a copy.

Below is a high-level overview of how it works. This will solve your current, and future questions about equity splits!

Perfect-Equity-Splits-for-Startups-Slicing-Pie.jpg

Heidi Hutchison Managing Director, Tau Consulting Group ❖ Outsourced Marketing Expertise ⇨ Driving Business Growth

April 23rd, 2015

I will be attending a conference in Atlanta from Wednesday, April 22 to Saturday, April 23. I will have limited access to emails. If this is urgent, please call me on my mobile or text me at (858) 245-7003. I will be back in the office on Monday, April 27. Cheers, Heidi

Eric Levenson

April 19th, 2015

Seems high unless you're not paying him much

Chris Carruth VP/Director. Strategy | Business Development | Operations | Product | Solutions

April 19th, 2015

Equity, being the most expensive form of capital, should be conserved where possible. If you look up blogs/interviews/articles on equity C-level non-founders are typically in the  5% range..or less. But it all depends on how valuable this person is in terms of their contributions being essential to making your numbers and therefore the return your investors is looking for? 

If mission critical could go as high as 10%..with appropriate vesting and cliff as others have alluded. IMHO it is "cheaper" to set up incentive plans and perks that "fill the gap" versus giving more equity upfront. 

Eliahu Gal-or presso Lightwave International Wellness Research & Enterprises

April 19th, 2015

Mike Moyer has said it all! I see his plan as the most efficient way to not have too much complication in the beginning, yet preventing future ones. I really like it and plan to implement it with my startup. Nice to meet you here Mike. I hope that you managed to read my prior post before it disappeared, otherwise please e-mail me and I will CC it to you.

Anonymous

April 19th, 2015

I assume you bring him on board as an early employee and not a cofounder? You are still bootstrapping?
5 % without pay doesn't seem like a whole lot tbh. Are you sure you will have money to pay him at some point? The question is about how much you value his contribution, how much more is your company worth with him. 

If there are just 2 founders and you are just starting, you might go even 45-35-20. 

If you have 2 founders, 2 other early employees and already have traction/revenue/investments you might go 30-25-10-10-5 with 20 % for an option pool (and I'm assuming convertible notes for the investors)

And don't forget vesting, really important. Ideally with a cliff.

http://www.socalcto.com/2011/09/equity-for-early-employees-in-early.html