There's no single right number — equity grants for early engineers depend on hire number, company stage, the engineer's seniority, and how much cash you're paying. But there are defensible ranges, and there's a right way to think about the tradeoff between cash and equity.
This guide gives founders a framework for setting early-engineer equity, grounded in what engineers at each level actually earn.
The single most important thing to understand: equity grants shrink quickly as you hire. Your first engineer and your tenth engineer are not in the same conversation.
A rough, widely-used framework for early-stage equity grants:
| Hire | Typical equity range | Context |
|---|---|---|
| First engineer (pre-PMF) | 0.5% – 2%+ | Founding engineer; often below-market cash |
| Engineers 2–5 | 0.25% – 1% | Still very early, meaningful ownership |
| Engineers 6–10 | 0.1% – 0.5% | Post-seed, approaching market cash |
| Engineers 10+ | 0.05% – 0.25% | Grants compress as headcount and valuation grow |
These are ranges, not rules. A staff-level engineer joining as your second hire may land at the top of the band; a mid-level engineer joining as your fifth may land at the bottom. The point is the shape: the curve drops steeply, and candidates who understand startup equity expect that.
Equity percentage is downstream of a more fundamental question: how much cash are you paying? An engineer accepting a below-market salary should receive more equity to compensate for the risk and the foregone cash.
Use real market cash numbers as your anchor. The median Senior Software Engineer base salary is $197,000, and the median Founding Engineer base is $195,000. If you're paying meaningfully below those numbers, your equity grant needs to do more work. If you're paying at or above market, you have room to grant less.
At the senior end, Staff Engineers at AI-native startups carry annualized equity value in the range of $100,000 to $300,000 (illiquid) on top of base — a useful reference for what "meaningful equity" looks like in dollar terms, not just percentages.
The grant percentage matters less than how you explain it. Strong engineers have seen inflated equity pitches and discount them. What earns trust:
Give them the math, not the dream. Share the number of shares, total shares outstanding, the most recent preferred price, and the vesting schedule. Let them model their own outcome. Be honest about dilution and illiquidity. Equity is a bet that may pay nothing, and future rounds will reduce their percentage. Saying this out loud builds more credibility than a big headline number ever will. Tie equity to the cash story. "We're paying slightly below market and giving you more equity because we want you to share the upside you're helping create" is a coherent, honest pitch. A vague "huge equity upside" is not.This is for founders setting equity for their first ~10 engineering hires at an early-stage company. If you're at Series B or later with established compensation bands, your equity framework should be governed by formal leveling and benchmarking, not these early-stage ranges. And this guide covers employee equity grants, not co-founder splits, which are a fundamentally different conversation.
Q: How much equity should I give my first engineer? A: A first engineer joining before product-market fit — a founding engineer — commonly receives 0.5% to 2% or more, depending on how early they join, their seniority, and whether they're accepting below-market cash. The grant should be larger if the salary is below the market median (around $195,000 base for founding engineers). Q: How much equity for engineers 2 through 10? A: Equity compresses quickly: engineers 2–5 commonly land in the 0.25%–1% range, engineers 6–10 in roughly 0.1%–0.5%, and engineers past the tenth hire typically 0.05%–0.25%. These are ranges that depend on stage, the engineer's seniority, and the cash component of the offer. Q: Should I give more equity or more cash to early engineers? A: It's a tradeoff anchored to market cash. If you pay meaningfully below the market median (around $197,000 for a senior engineer, $195,000 for a founding engineer), your equity grant needs to be larger to compensate for the risk and foregone cash. If you pay at or above market, you can grant less equity. Q: How do I explain startup equity to a candidate without overselling? A: Give them the inputs to model it themselves — shares granted, total shares outstanding, the latest preferred price, and the vesting schedule — and be explicit about illiquidity and dilution. Engineers trust an offer they can calculate far more than a vague promise of large upside. Q: Does Recruiting from Scratch help founders set engineering equity? A: Yes. We help founders calibrate competitive, honest equity and cash offers for early engineering hires using current market data, and we source the engineers to fill those roles. A well-framed offer closes strong candidates; an inflated one loses them.Tell us about your open roles and we'll start sourcing within 48 hours.
