January 12, 2022
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3 Minute

The Founder’s Basic Guide to Employee Equity for Early-Stage Startups

Growth & Scaling


Your startup is growing fast.

Whether you’re eyeing potential co-founders to join your fleet or lining up the next set of devs to carve out your product, you’ll need a way to snatch the top talent.

That’s where employee equity comes in clutch.

As part of a compensation package, offering equity to new hires is your bargaining chip to securing an awesome team of high performers who are committed to a long-term vision with your company.

Equity rewards employees with a piece of the pie and is kind on your cash reserve when money’s tight, so it’s a win-win.

The idea is that the value of equity multiplies year over year as the valuation of your startup goes up.

Here’s what every founder should know about employee equity in an early-stage startup.


The Basics


Building Your Compensation Model

  • AngelList’s interactive tool that sorts salary and equity compensation by position, skill, and location 
  • 7 ways to think about equity in a SaaS startup, brought to you by Dan Martell


Distribution 


Schedules


And there you have it–your cheat sheet on how employee equity works in an early-stage startup.  

As a founder, providing equity as part of your employee compensation can help you recognize who’s highly motivated to drive your company forward.

Knowing what stocks to offer, how they’re granted over time, and how much risk your employees are willing to take are all important steps to incentivize and reward the players on your team as your company scales.


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