One of the most common questions I get from seed-stage founders: “How much equity should I give my first hires?”
It’s a high-stakes decision. Give too little and you can’t attract talent. Give too much and you’ll regret it by Series B when you’re trying to recruit a CFO and your option pool is decimated.
Carta’s latest State of Seed report gives us real benchmarks from tens of thousands of startups. Here’s what the data actually shows.
The First 5 Hires: What They Actually Get
Let’s start with the headline numbers. These are fully diluted equity grants, typically vesting over 4 years with a 1-year cliff:
Hire #1: 1.50% (median)
- 25th percentile: 0.50%
- 75th percentile: 4.00%
Hire #2: 0.85% (median)
- 25th percentile: 0.30%
- 75th percentile: 2.00%
Hire #3: 0.50% (median)
- 25th percentile: 0.20%
- 75th percentile: 1.20%
Hire #4: 0.44% (median)
- 25th percentile: 0.18%
- 75th percentile: 1.00%
Hire #5: 0.33% (median)
- 25th percentile: 0.13%
- 75th percentile: 0.80%
The pattern is clear: equity drops fast. Your first hire gets nearly 5x what your fifth hire gets at median. By the time you’re making your fifth hire, you’re already in the “normal employee” range.
The Equity Curve Is Steeper Than You Think
What jumps out from this data:
The drop from Hire #1 to Hire #2 is massive. You go from 1.50% to 0.85%—a 43% decline for the very next person through the door. That first hire is special. They’re taking the most risk, joining when there’s nothing but a pitch deck and a prayer. Price accordingly.
By Hire #3, you’re already below 1%. Most founders I talk to assume they’ll be giving “1-2%” to their first several employees. The data says otherwise. Only your first hire typically breaks 1% at median.
The range is enormous. Look at Hire #1: the 25th percentile is 0.50% and the 75th percentile is 4.00%. That’s an 8x spread. Context matters—stage, role, seniority, location, and how desperate you are all factor in.
What About Advisors?
Founders consistently over-grant to advisors. Here’s what the data shows for advisor equity (typically vesting over 2 years):
Pre-Seed Advisors:
- 25th percentile: 0.09%
- Median: 0.24%
- 75th percentile: 0.50%
- 90th percentile: 1.00%
Seed Advisors:
- 25th percentile: 0.06%
- Median: 0.12%
- 75th percentile: 0.25%
- 90th percentile: 0.49%
Series A Advisors:
- 25th percentile: 0.02%
- Median: 0.05%
- 75th percentile: 0.11%
- 90th percentile: 0.25%
The takeaway: only 10% of pre-seed advisors get more than 1%. If someone is asking for 1%+ as an advisor, they’d better be bringing something extraordinary—a key customer intro, a critical hire, or domain expertise you literally cannot get elsewhere.
Most advisors should be in the 0.1-0.25% range with a 2-year vest. If they balk at that, they probably weren’t going to be helpful anyway.
The Mistakes Founders Make
Mistake #1: Treating all early employees the same. Your first hire and your fifth hire are not in the same category. The data shows a 4-5x difference at median. Don’t flatten this curve.
Mistake #2: Over-granting to advisors. I’ve seen founders give 1% to advisors who send one email introduction and then disappear. Median advisor equity at seed is 0.12%. Use that as your anchor.
Mistake #3: Not leaving room for senior hires later. If you give away 15% in your first 10 hires, you’ll be in pain when you need to hire a VP of Engineering or CFO at Series A/B. Those roles often require 0.5-1.5% at later stages, and it has to come from somewhere.
Mistake #4: Ignoring the range. Medians are useful benchmarks, but the right number depends on the candidate. A first hire who’s a former CTO at a successful startup is worth more than a talented but unproven engineer. Use the 25th-75th percentile range to calibrate.
Being The First Non-Founder Really Matters
The data is clear: your first employee gets ~1.5%, it drops to ~0.85% for your second, and by your fifth hire you’re at ~0.33%. The curve is steep and founders consistently underestimate how quickly equity grants should decline.
Advisors get far less than many founders think—0.12% at seed is median, and only the top 10% get above 0.5%.
Use these benchmarks as starting points, but remember: equity compensation is ultimately about what it takes to get the right person to join your company at the right time. The data tells you what’s normal. You have to decide what’s right for your specific situation.
