Equity distribution

What is the usual equity offered to team members with non-founder status? What additional aspects should one consider?

Suvrajit Saha Sowing seeds

October 20th, 2017

I am now focusing on building a team for my based startup in Europe. I intend to offer people I recruit an equity in the startup and a salary, which won't be on par with those at established companies.

I am however unsure as to what percentage of shares to offer and would like to have some input from people already in the know about such negotiations and offers.

Thanks a lot in advance!

Marc Love Cofounder, Entrepreneur, Team Lead & Sr. Software Engineer

November 3rd, 2017

You should acknowledge that your business idea is worth no equity. Being the "founder" is only relevant in that it signifies that you took the most risk to start the business. If you're a founder with just an idea—no money, no product, and no customers—then any team member who joins you is taking the same amount of risk that you are and should be given equal equity to you.

If you've already started the business—meaning you've already started building an initial product and have raised money or already have paying users—then the amount of equity you should offer can be less but it should be proportional to how stable the business is and how much of a risk the new team member is taking by joining you. How much runway do you have? If it's less than a year, it's still very risky for them to join your team. If it's a couple years' worth, then the risk is much less.

Once you've raised a Series A, the numbers drop significantly because it's less risky. Market rate equity ranges anywhere from 0.2%-10%, depending on the position.