How Much Should I Give My First Hires?

Early employees often trade lower salaries for equity. Make sure you offer enough to reward risk — but not so much that you lose future hiring flexibility. Equity should reflect their role, impact, and risk.

Why it Matters

Your early hires shape your product and culture — and take on big risk. Equity helps align incentives.

If you under-compensate, you may lose them. If you over-compensate, you create equity imbalances that hurt future hiring and fundraising.

Founders Checklist

Use benchmarks: 0.25%–1% for early engineers/product/design leads
Tie to risk and impact — earlier = more equity
Use a vesting schedule (4 years, 1-year cliff)
Set clear expectations around cash vs. equity tradeoff
Be transparent about how much the equity could be worth

Founder Fails

Giving same equity to vastly different roles
Not explaining dilution or option mechanics
Failing to put vesting in writing
Promising equity value you can’t back up
Over-titling early hires who may not scale

When to ask for Help

You’re making your first or second hire and unsure what to offer
You want to align compensation with market expectations
You’re debating cash vs. equity tradeoffs in offers
You’re setting up your first offer letter with options
You’re trying to justify equity amounts to a new candidate

Frequently Asked Questions

Q: Should I give titles too?
A: Yes — but be careful. Don’t give out “Head of” or “VP” roles unless they’ll scale with the company.

Q: How do I calculate equity value?
A: Multiply % ownership by projected exit value. Just be honest: early-stage equity is high-risk.

Q: What if they want more equity than the role warrants?
A: Talk about role, value, and market benchmarks. If they still push, they may not be the right fit.