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How much equity should I give a new starter? The first non-founder to join the team.

I am one of two founders on a pre-launch startup, we hold the full equity in the company, equally. The prototype is built and we are currently in beta testing with roughly 40 users. We have had someone helping us out voluntarily over the last couple of months with marketing and content and we are keen to have them on board full time in December. We are discussing an equity agreement right now, which is fair for us both. This will most likely be for 6% total, with 4% at the end of 2015 (subject to vesting), 6% by the end of 2016. If they leave earlier the shares will be deferred. Does this sound sensible? is this too little/too much? Do you have any advice on this? We are really keen to keep them on board, but also want to be sensible.

  • 6% is appropriate especially with no salary, but I would spread it out more. Say 2% end of 2015, and the remaining 4% vesting monthly for 3 years thereafter.

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  • There is not enough information in your request to give a good answer.

    How much money would he make if he were working elsewhere full time? How much valuation do you think you’d be able to get from an investor? How valuable is he to you – is this person a stop gap talent or is he someone that would be a major loss if he declined to join.

    Asking those questions would allow you to come to a reasonable answer yourself.

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  • Seems quite generous, but considering no salary, might be appropriately so. Personally, would award 5%.

    You are using valuable currency, so agree with the thoughts on vesting. You should try and extract as much value out of your equity as possible, and a smart vesting schedule is the way to do it via getting long-term commitment/minimal disruption to staff early on during the critical building stages.

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  • So now your adding to your team they only get 5% and you get all the rest? AND YOU ARE NOT PAYING THEM??!!!

    They must be smoking crack because that’s such a shitty deal. I worked purely for sweat equity and I’ll never do it again. It’s basically slave labor as most equity of most startups is totally worthless.

    Either pay them a salary, or make them a cofounder and give them a respectable amount of equity.

    And yes, make it vest over time….everyones should be vesting!

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