Startup Funding Espresso -- Employee Equity
Employee Equity Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Equity compensation for employees varies greatly based on the location, type of startup, and job to be done. An overall allocation for employees is around 15% of the total equity. The first five hires receive 1% to 2% each. Later employees receive 0.25% to o.5% each. You can also apply a multiplier against the employee\u2019s salary. This makes it easy to apply to employees across the board. Director level and above receive 1% while those below receive 0.5%. Employees seeking a higher salary receive a lower equity percentage. Those accepting a lower salary receive a higher equity percentage. Contractors typically don\u2019t receive equity. Other factors impacting the equity decision include the current market conditions. You can use equity to compensate seed-stage employees with salaries well below market rate. Vest the equity over four years with a one-year cliff. This ensures the employee stays with the company for a meaningful period. Capture all equity agreements into the cap table. Remember, follow-on fundraises will dilute all the employee shareholders similar to the founder and co-founder.\xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let\u2019s go startup something today. _______________________________________________________For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .