Dear SaaStr: How Much Equity is Typically Given Out to the First 50 Employees?
Typically, for the first 50 employees, you’re looking at allocating around 10%-20% of the company’s equity in total.
This is usually set aside in the employee stock option pool (ESOP) early on, and then refreshed as needed after each funding round. The exact percentage depends on how aggressively you’re hiring, your growth stage, and how much equity you want to reserve for future hires.
- For venture-backed start-ups at least, it’s common to start with 15%-20% of the cap table allocated for employees in the early days.
- Over time, as you grow and bring on more senior hires, you’ll likely grant 6%-8% of equity annually, with some of that being replenished as employees leave.
- By the time you’ve scaled to 50 employees, you’ll probably have distributed a significant portion of that initial pool, but you’ll also need to keep refreshing it to ensure there’s enough to attract and retain top talent .
The distribution within that pool varies widely. Early employees—especially the first 10 or so—often get larger grants because they’re taking on more risk and helping build the foundation of the company. And the very first employees, if nothing else, often get roughly 2x a “normal” grant for that role and level of seniority.
As you scale, the grants for later hires tend to shrink, but they’re still meaningful enough to align incentives.
Expect that employees as a group will end up owning about 10%-20% of the company at IPO or exit, depending on how many rounds of funding you’ve raised and how much dilution you’ve taken along the way. I
