Founding engineer offer letter template

The template

Dear [Name],

We’re excited to offer you the role of Founding Engineer at [Company], reporting to [Founder name], starting on [date]. This letter sets out the terms.

Salary. Your base salary will be $[amount] a year, paid [twice a month] and reviewed [every year, or at our next priced round].

Equity. Subject to approval by the board, you will be granted an option to purchase [number] shares of common stock, which is [x.xx]% of the company’s fully diluted shares as of [date]. The exercise price will be the fair market value on the grant date, as set by the board based on a 409A valuation.

Vesting. The shares vest over four years, with 25% vesting on the first anniversary of your start date and the rest monthly over the following 36 months. [You may exercise unvested options early, subject to the company’s right to repurchase unvested shares.]

Benefits. [Health, dental and vision coverage, paid time off, equipment, and any relocation support.]

At-will employment. Your employment is at will, which means either of us may end it at any time, with or without cause. You will also be asked to sign our standard confidential information and invention assignment agreement.

Expiry. This offer expires on [date, usually five to seven days out].

[One or two sentences only you could write, about why this person and why now.]

[Founder name], [Title]

The terms to get right

Percent as well as shares. A share count means nothing without the total. State the percentage of fully diluted shares and the date it was calculated. A careful candidate will ask for it anyway.

The exercise window. Most option plans give 90 days after someone leaves to exercise, which can force an early employee to find a large sum or lose the grant. A longer post-termination window, of five or ten years, costs the company little and matters a lot to the people who join first.

Early exercise. Letting a founding engineer exercise before vesting and file an 83(b) election within 30 days can lower their tax bill a great deal while the exercise price is still low. If your plan allows it, say so in the letter.

Acceleration. Some founding engineers ask for double-trigger acceleration, where unvested shares vest if the company is acquired and they lose their role. It’s a reasonable request at this stage, and deciding your answer before the offer goes out avoids a slow back and forth.

Mistakes that cost founders the hire

One common mistake is sending the letter before the conversation. Walk the candidate through the numbers on a call and send the letter the same day. A letter that arrives a week after a verbal yes gives a candidate time to field a counteroffer. Very short expiry dates tend to feel like pressure, and five to seven days is common.

This template is a starting point, not legal advice. Have your company’s lawyer review it, especially the equity section, which has to match your stock plan. How much equity to give your first engineer covers the size of the grant.