Respectfully, I disagree with Matthew on his first point though we reach some of the same conclusion; I suggest, vehemently so, yes offer several options. Within reason. Equity is merely a form of compensation, a form that has value relative to your future outcome, present value, and the expectations being set with the potential hire.
That last part is critical to consider and wherein MOST startup founders fail to build good teams. Equity matters. Equity says something. It's not just money; it can mean more or less depending on all of those variables.
- Is there potential future value in the equity and if so, what?
- What is that relative to present value?
- How much do you value this person? Are they part of the team or just a hire?
Having answered all of that, you arrive at a % allocation the hire should be offered. You may not want to offer that much; regardless, the industry has a vague standard to equity grants and if you don't meet those standards, relative to the answers to those questions, you aren't compensating that person fairly and frankly, they should consider work elsewhere.
Now, whether or not you offer the hire that much equity is up to you but if the industry effectively gives someone at a given stage, value, and consideration to their being more than just an employee, 3%, that's part of their standard compensation and offering less is akin to underpaying.
Why should you then offer some options? Because you're negotiating and the value of that equity can be considered relative to what you're paying and how you BOTH negotiate says a lot about your respective expectations. But to reiterate: within reason. You don't offer 1%, 3% or 6%. Think of it this way:
- 2.5% and $100k per year
- 3% and $90k per year
- 3.5% and $70k per year
Consider all of the messages sent. More equity = greater commitment on your part. More interest in hiring this person as part of your core team. It also suggests you can and perhaps should pay less.
You can offer more equity and less comp outright but why not give them candidate options as where they are drawn says a lot about them too. Perhaps they want more comp so does that mean a) they need more money b) they don't value the equity as much ? Now you can explore that with them and build a stronger team by meeting BOTH the expectations and the needs of your employees.
Lack of transparency kills culture so create a culture in which what's transparent is that everyone is there on their terms and not just yours. Everyone has slightly different grants and salaries based on their needs and expectations and that's OKAY, that's a good thing, you're in business for everyone, not just yourself by way of some equity granted to people privately to commit them to your team.