StartupHoodlum

Over the past couple of months, numerous startup friends have been asking me how much equity to give to their first hires.  After searching around and talking to startups around the valley, I think VentureHacks has pretty good basic guidelines.  The full info is here: http://venturehacks.com/articles/option-pool-shuffle .  I have copied the most relevant info from VH below (keep in mind this post is from 2007, but from discussions with folks, it seems to still be about right):

“To allocate the option pool from the hiring plan, use these current ranges for option grants in Silicon Valley:

Title	Range (%)
CEO	5 – 10
COO	2 – 5
VP	1 – 2
Independent Board Member	1
Director	0.4 – 1.25
Lead Engineer	0.5 – 1
5+ years experience Engineer	0.33 – 0.66
Manager or Junior Engineer	0.2 – 0.33

These are rough ranges – not bell curves – for new hires once a company has raised its Series A. Option grants go down as the company gets closer to its Series B, starts making money, and otherwise reduces risk.

The top end of these ranges are for proven elite contributors. Most option grants are near the bottom of the ranges. Many factors affect option allocations including the quality of the existing team, the size of the opportunity, and the experience of the new hire.

If your company already has a CEO in place, you should be able to reduce the option pool to about 10% of the post-money. If the company needs to hire a new CEO soon, you should be able to reduce the option pool to about 15% of the post-money.”

I’ll add that advisors can sometimes be given from .1%-.5% (sometimes I have heard even 1% or more, but I think that causes long term problems because I don’t believe an advisor will ever be as valuable as a lead engineer to a startup… but there are exceptions to every rule).