# Question: How Much Equity Should A Startup Engineer Get?

## How many founders is too many?

The optimal number is two founders, possibly three, but not more than three.

Three is really getting to a crowd.

Although there is argument to be made that having three equal founders allows for a tie breaker.

A third founder runs the risk of gravitating towards a more influential founder..

## How much equity should a founder get?

The equity split at 20% for the founders will typically be; 20-25% for the management team, 20% for the founders, and 55-60% for the investors (angel all the way to late stage VC).

## How do you value equity in a startup?

To determine the current value of a share (called the fair market value, or FMV), you divide the valuation by the number of shares outstanding. For example, if a company is valued at \$1 million and it has 100,000 shares outstanding, the FMV of a share is \$10.

## How much equity do early startup employees get?

A third method is to note that early-stage employees generally get between 1 and 5% as much equity as a founder (early stage employees will get usually . 5-1% and founders, at the time they are giving out those large equity stakes, will have 20-50%).

## What does 10% equity in a company mean?

The stake that someone has in a company refers to what percentage of it they own. If you own a 10% stake in a company worth \$100,000, your stake is worth \$10,000. If that company doubles in value, your stake stays the same (10%), but it is now worth twice as much, as well, \$20,000.

## How is equity paid out?

Vested equity is paid out in increments over time. … In order to intensify this motivation, some companies have even taken to offering scaling equity, such that you earn progressively bigger stakes per year until you earn your total amount.

## Who gets equity in a startup?

Often, startup founders, employees, and investors will own equity in a startup. Initially, founders own 100% their startup’s equity, though they eventually give away the majority of their equity over time to co-founders, investors, and employees.

## Should founders pay themselves?

Career research company 80,000 Hours estimates that founders going through the Y Combinator accelerator program pay themselves about \$50,000. If they go on to raise more money, that salary can double. If the startup flops, \$50,000 could be the highest salary a founder makes.

## How much equity is needed for a board position?

Usually, the independent board members get equity for their services. For early-stage companies, a typical director might get somewhere between 0.5 percent and 2.0 percent equity. This percentage should drop as the company grows. In some cases, cash compensation is included.

## How much equity should a startup CEO get?

As a rule of thumb a non-founder CEO joining an early stage startup (that has been running less than a year) would receive 7-10% equity. Other C-level execs would receive 1-5% equity that vests over time (usually 4 years).

## How much equity should a startup employee get?

At a typical venture-backed startup, the employee equity pool tends to fall somewhere between 10-20% of the total shares outstanding. That means you and all your current and future colleagues will receive equity out of this pool.

## How do you negotiate equity in a startup?

Don’t think in terms of number of shares or the valuation of shares when you join an early-stage startup. Think of yourself as a late-stage founder and negotiate for a specific percentage ownership in the company. You should base this percentage on your anticipated contribution to the company’s growth in value.