Lewis Howler, Managing Director with SVB Startup Banking, shares some best practices on how much equity to offer to key employees.
Parceling out equity is a challenge for first time founders, and often even for the most experienced. Especially since each situation must be individualized.
This post provides some essential keys to fuel this process.
Eventually, founders need to think about creating an employee option pool — a more disciplined way to award equity over shaving off more shares with each new hire. “After a seed round, you want to have that employee pool at around 10% or 12%, plus or minus,” says James Currier, a four-time founder who is now a managing partner at NFX, an early-stage venture capital firm. Calibrating the precise size of that option pool, Currier and others say, depends on a company’s hiring ambitions over the coming 12 to 18 months — through a next funding cycle.