Here is info about stock options based on my experience from
several VC-backed companies, of my own, and of friends.
There are three chunks of stock in any startup:
- Founder equity. This is typically 30-40% or more, split across the
cofounders (often two people sometimes more). Often more than this at
first, and then dilutes with each round of investment.
I prefer two equal cofounders, with same stock and comp plan as
each other. Building a startup is a ton of work, and I think it works
best - and drives founders the hardest - if they are equal
partners. If one founder started before the other, the way to deal
with this is with vesting schedule, not with giving the second
founder less equity. Unless the second founder starts after a team
has been hired and there is a product and customers, at which point
the newer cofounder should get less equity than the original
- Investor equity. This can range 20-40% during the "Series A"
(first big financing), but it grows over time as more money is raised
in later rounds.
- Employee stock option pool. This is typically 10-20% of the
company. VPs usually get 1-2% each if they join at the beginning, but
less than that if they join "later". Other employees often get 0.1% or
so if they join at the beginning, but the amount can vary
widely. Dilutes with each new round of investment.
Most VC-backed technology companies will "vest" your stock monthly
over four years, with a one year "cliff". The cliff means that if you
leave before your first year anniversary, you get zero stock.
Incentive Stock Options (ISOs) are called "options" since you have
the option of "exercising" (buying) the stock each time it vests.