Equity feels free, until you look at your cap table and a fifth of it is gone.
Every option grant is a financing decision dressed up as a hiring decision.
Two currencies, two costs
Cash compensation eats runway, and you see it every month. Equity compensation eats ownership, and you don’t see it until it’s done.
- Grant too much, and you can box yourself out of future raises.
- Grant too little, and you can’t attract or keep the people you need.
Treat equity like cash
The founders who handle this well treat equity the way they treat cash: scarce, valuable and deliberate.
- Model your option pool against your next two rounds before you make grants.
- Tie grants to the role’s real impact, not to what a candidate asked for.
- Review the cap table effect of each grant the way you’d review a large expense.
Scorecard