Sizing grants

Ada and Ben close the Northwind seed round. They plan eight hires before the Series A. How much equity does each hire get? And how large must the option pool be to cover all of them? If the founders guess, they can give too much, or the pool can become empty when they need it. This lesson gives the data and a method.

Early hires get the most

The first employees take the most risk. The company has little money, no proof that the product sells, and a low value. Thus the first hires get a much larger part of the company than later hires. The size falls quickly with each hire.

Predict first

At the median, what part of the company do the first five hires get together?

Type a guess before you continue. A guess first, even a wrong one, makes the answer easier to remember.

Your guessSave my guess

The ranges are wide. The 75th percentile for the first engineer is almost seven times the 25th percentile. A median is a point in the middle of the data, not a correct price for your hire. The size depends on the role, the salary, the risk that the hire takes, and how much the company needs that person.

From a percentage to options

A grant letter gives a number of options, not a percentage. To set the number, multiply the percentage by the fully diluted shares on the grant date:

Options = grant percentage × fully diluted shares
        = 1.49%            × 18,382,353
        = 273,897

The fully diluted shares increase with each round. Thus the same percentage is a larger number of options at a later stage. Also, a grant of the same number of options is a smaller percentage later.

Work it out

Northwind has 18,382,353 fully diluted shares. Ada wants to give hire 4 a grant of 0.5%. How many options is that?

Your answerCheck

Size the pool from the hiring plan

All of these grants come out of the option pool. Investors usually ask the company to make the pool large enough before the round closes. Because the pool goes into the pre-money valuation, the holders before the round pay for it, and these holders are mostly the founders. The lesson on the option pool shuffle shows the math.

How large is a typical pool? In the Carta Founder Ownership Report 2026, the median option pool after a seed round was 12.1% of the company (rounds from 2021 to 2025). But the right size for your company comes from your plan, not from the median. The pool must cover these grants until the next round:

• A grant for each new hire in the plan
• A reserve for refresh grants to current employees
• Grants to advisors

The planner adds these three parts. Change the number of hires and the pool in the term sheet. Look at the gap between them.

Planner

Size the option pool from your hiring plan

Plan the hires until your next round. Compare the pool that the plan needs with the pool in the term sheet.

Hires before the next round

8

Grant for each hire after the fifth

Carta, June 2023 to June 2024: approximately 0.3% for hires 6 to 10, less for each later hire. The first 10 hires got less than 5% together.

Advisors

2

Reserve for refresh grants

20%

A part of the hire grants. No public benchmark exists, so this is your policy.

Pool in the term sheet

12%

The Carta median after a seed round is 12.1% (rounds from 2021 to 2025).

Grants for hires

4.37%

8 hires

Other grants

1.37%

Advisors and refreshes

Pool needed

5.74%

Not in the plan

6.26%

Grants by hire, as a part of the company

Hire 1

1.49%

Hire 2

0.85%

Hire 3

0.5%

Hire 4

0.44%

Hire 5

0.34%

Each later hire

0.25%

Hire 1 gets 1.49% of the company, as much as 6 hires after the fifth. Early hires take more risk, so they get more. Your plan needs a pool of 5.74%.

A 12% pool leaves 6.26% that the plan does not use before the next round. When the pool is in the pre-money valuation, the holders before the round, mostly the founders, pay for all of it. The new investors pay for none of it. Ask for a pool that agrees with the plan.

Worked example · step 1 of 5

Northwind's pool for eight hires

1. 1

   Add the grants for the first five hires

   Use the median for each hire number.

   1.49% + 0.85% + 0.50% + 0.44% + 0.34% = 3.62%

Show step 2Show all steps

The medians mix all roles and levels. If your plan has a hire with a larger grant, for example a senior executive, add the difference. A pool that is too small also has a cost. If the pool runs out before the next round, the company must add shares to it, and that dilutes every holder.

Refresh grants

A refresh grant is a new grant to a current employee. Companies give refresh grants for three reasons:

• To reward strong work
• To keep an employee whose first grant is mostly vested
• To replace value that later rounds took through dilution

For example, an engineer’s first grant of 40,000 options is 75% vested after 3 years. In one more year, the grant is fully vested, and the engineer has less reason to stay. The company adds 12,000 options that vest over 4 more years.

Dilution is a strong reason for refreshes. Suppose that hire 1 gets 1.75% at seed, which is 321,691 of 18,382,353 shares. By the Series C, a bridge SAFE, three more rounds, and their pool top-ups increase the fully diluted shares to 44,793,830. Without a refresh grant, the stake falls to 0.72%. At a Series C price of $8.93, its paper value is $2.87M, before the strike price and the preferences. The percentage falls, but the value can increase.

We found no reliable public benchmark for the size of refresh grants in 2025 or 2026. Thus a refresh size is a company policy, not a market standard. The pool must include it.

Advisor equity

An advisor helps the company but is not an employee. Thus advisors get NSOs or restricted stock, not ISOs. A widely used template is the free FAST agreement from the Founder Institute. Version 3 (July 2026) sets the grant by stage and by how much the advisor does.

Work it out

An expert advisor joins Northwind at seed, when the company has 18,382,353 fully diluted shares. The FAST grant is 0.75%. With 2-year vesting and a 3-month cliff, how many shares vest at the cliff?

Your answerCheck

RSUs at late-stage companies

A RSU (restricted stock unit) is a promise to give you a share later, at no cost. Late-stage private companies often change from options to RSUs. The reason is the strike price. When the 409A price is high, a new option has a high strike price, and the option has less value to the employee.

Private company RSUs are usually double-trigger RSUs. You get the shares only after two events:

• You complete the time-based vesting.
• The company has a liquidity event, for example an IPO or a sale.

You pay tax on the value as wages when the RSUs settle, not before. For example, you hold 10,000 double-trigger RSUs and complete 4 years of vesting. In year 5, the company has an IPO at $30 a share. At settlement, you have $300,000 of wage income, and the company withholds tax.

Double-trigger RSUs have a risk. They expire on a fixed date, usually 6 to 7 years after the grant (NASPP, April 2026). Tax rules make it hard for a company to extend that date. If no liquidity event occurs in time, you lose the RSUs, even if they are fully time-vested. Holders of these RSUs also usually cannot sell them in a tender offer.

Quiz · question 1 of 5

Test what you learned

For grants from June 2023 to June 2024, what was the Carta median grant for the first hire?

• AApproximately 0.3%
• BApproximately 10%
• CThe same as each later hire
• DApproximately 1.5% of fully diluted shares