How much equity do I issue to my employees and contractors?

Takeaway: There’s no one-size-fits-all number—equity grants should be based on market data for the role, the individual’s experience, and your company’s stage, all balanced against the size of your equity incentive plan and your long-term dilution goals.

Founders often struggle to balance the need to attract and retain top talent with the need to preserve ownership for themselves and early investors. The right approach is not guesswork—it’s a data-driven decision informed by industry norms.

Key Factors That Drive Grant Size

  • Company Stage: Earlier-stage companies offer larger grants to compensate for higher risk. For example, your first non-founder engineer might get 1–2%, while a similar hire after a Series C might receive 0.05% or less.

  • Role and Seniority: Senior leaders (e.g., VP of Engineering) typically receive much larger grants than junior hires. In specialized fields like biotech, equity levels can also vary significantly by technical credentials (e.g., PhD scientists vs. software engineers).

  • Market Benchmarks: Use credible compensation surveys and tools like Carta, AngelList, or Pave to find equity ranges for specific roles and stages. This ensures offers are competitive and defensible.

The Equity Incentive Plan: Your Equity Budget

Equity grants come from an equity incentive plan (aka stock option pool)—a set number of shares reserved for employees, directors, and consultants. This pool is typically established (or refreshed) during a financing round, often 10–15% of post-money capitalization at Series A. Managing the pool strategically ensures you have enough equity to hire the talent you need without repeated, dilutive expansions.

Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.