How much equity should a startup give its first engineer?

The commonly quoted band runs from a fraction of a percent to a few percent of fully diluted shares. Where an offer lands depends on how early the company is, how much salary the person is trading away, whether they own the technical direction or execute against a set plan, and how many people will be given the same title.

Should the first engineer get a founding engineer title?

Only when the equity and the scope justify it. A founding title attached to a standard early hire grant and execution level scope is read by experienced candidates as the title standing in for equity, and it costs credibility with exactly the people you want.

Should an early engineer take more equity or more salary?

It is a genuine trade and founders should make it explicit rather than presenting one number. A candidate taking a significant pay cut is buying equity with the difference, and telling them the exchange rate directly earns more trust than a large percentage offered without context.

What equity terms matter besides the percentage?

The grant should be quoted as a percentage of fully diluted shares with the share count in writing. Beyond that: the vesting schedule, the cliff, and the post departure exercise window. A ninety day exercise window is standard and is where many grants become worthless in practice, so extending it is a cheap way to improve an offer.

For founders

How much equity should you give your first engineer?

The band people quote is wide enough to be useless on its own. What actually sets the number, the terms that matter more than the percentage, and the offer that costs you the person.

Zelcast

The commonly quoted band for a first engineering hire runs from a fraction of a percent to a few percent of fully diluted shares, and where you land inside it depends on four things: how early it is, how much salary the person is giving up, how much of the product they will own, and how many people you plan to give the same title. The percentage matters less than the terms attached to it, and the offer that loses you the best candidates is a founding title stapled to a standard early hire grant.

What you are actually buying

Equity at this stage is not compensation in any normal sense. It is how you pay for risk that you cannot pay for in cash, and how you get someone to behave like an owner rather than an employee for the two or three years where that difference decides whether the company exists.

That framing sets the number better than any benchmark. If the person is taking a real pay cut to join something unproven, and the thing they build is the product rather than a piece of it, they are carrying founder shaped risk and the grant should look like it. If they are joining after the direction is set to execute well against a plan, they are not, and it should not.

The four things that move the number

Stage. Joining two founders and a whiteboard is a different bet from joining after a seed round with a working demo, and different again after a Series A. Every month of de-risking moves equity down faster than salary moves up.

The cash trade. A candidate taking sixty percent of market salary is buying equity with the difference, and they know it. Be explicit about the trade and let them choose where on it they sit. Two offers with very different percentages are often the same offer once you price four years of salary gap.

Scope. Owning the technical direction is closer to a co-founder than to a hire. If you want that, pay for it. If what you need is a very strong builder against a plan you have already set, say so plainly and price it as the good job it is.

Count. One first engineer is a different story from four people who will all be told they are founding engineers. Index Ventures publishes a free guide to option plans by stage, the best public benchmark set we know of. Decide the total early pool before you make the first offer, because the second and third offers are constrained by the first.

The terms that matter more than the percent

Quote the grant as a percentage of fully diluted shares and put the share count in writing. A number of options with no denominator is not information, and a candidate who has done this before will read it as evasion.

Get the mechanics right and say them out loud: the vesting schedule, the cliff, and the post departure exercise window. Ninety days to find the cash to exercise is standard, and a lot of grants die there. The tax rules behind that deadline are set out in the IRS guidance on stock options, and Holloway’s guide to equity compensation is the clearest plain English explanation of the mechanics. Extending it is one of the cheapest ways to make an offer better without giving away more of the company.

Be ready to explain dilution honestly. What you expect to raise, and what their stake plausibly looks like two rounds out. Founders who dodge this question lose credibility with exactly the candidates they most want.

The offer that costs you the person

A founding title, a standard early hire grant, and founder level expectations. Strong candidates read that combination immediately, and what it tells them is that the title is being used as currency because the equity is not.

Titles are free and equity is not. If you are not willing to give a founding sized stake, do not use the word. Offer a strong early engineer package, describe the job accurately, and you will keep the trust of the people who turn it down as well as the one who takes it.

After the first offer

Plan for a refresher before you need one. The person who joins at the beginning is diluted by every round they help you raise, and a grant that made sense at seed looks thin by Series B. Companies that handle this well decide the policy early and apply it without being asked. Companies that handle it badly wait until the person is already halfway out the door.

We wrote the engineer’s side of this argument separately. Read it before you negotiate against it, along with where the founding line actually sits.

Common questions

How much equity does a first engineer get?

Commonly a fraction of a percent up to a few percent of fully diluted shares. The spread tracks stage, the salary trade, scope, and how many people will carry the title.

Should I give my first engineer a founding title?

Only if the grant and the scope match it. A founding title on a standard early hire grant reads as the title being used instead of equity, and strong candidates spot it.

Equity or salary for an early engineer?

Offer the trade explicitly and let them choose. Being clear about the exchange rate earns more trust than a generous number presented without context.

What terms matter besides the percentage?

Percent of fully diluted shares in writing, the vesting schedule and cliff, and the post departure exercise window. The exercise window is where good grants die.

If you are writing the first offer and want to know how it will read to the people you want, we can tell you. Tell us what you’re hiring for →