Executive equity at seed and Series A

If you’re at an early stage, you’re likely going to pay a senior hire less than the market rate - so what you do with equity decides whether the good candidates take the job, but also whether you regret it in three years.

This guide covers the four things that come up on nearly every senior search I’ve run: how much, what terms, how to set it up so it’s tax-efficient in the UK, and the mistakes I see founders make. The percentages come from my benchmarks, which are for consumer startups at seed and Series A.

How much

These are the ranges I see for a first senior hire in each role, as a percentage of fully diluted share capital. Seed first, Series A second.

CFO: 0.75% to 2% at seed, 0.4% to 1% at Series A. See the CFO benchmarks.

COO: 0.75% to 2% at seed, 0.4% to 1% at Series A. See the COO benchmarks. A COO who’s effectively a late co-founder or the founder’s number two can sit above this.

CMO: 0.5% to 1.25% at seed, 0.2% to 0.75% at Series A. See the CMO benchmarks.

Head of Customer: 0.3% to 1% at seed, 0.15% to 0.5% at Series A. See the Head of Customer benchmarks, and note that this role is usually under-equitised relative to its impact on retention.

The Series A ranges are narrower and lower because the risk is lower and the cash is closer to market. That’s a trade that candidates at this level understand.

The terms

Four years, one-year cliff, monthly vesting after the cliff is standard. What this means in practice is nothing vests in the first twelve months, so if the hire doesn’t work out and they leave inside a year, they take nothing. From month thirteen, they earn a forty-eighth of the grant each month.

I think equity is the single most important lever an early-stage founder has. Cash buys you someone’s time but equity buys alignment: a real upside that everyone in the room works towards, and a reason for a senior hire to care about the outcome the same way you do. So my advice runs against the instinct to be stingy with it. If you’ve found someone exceptional, be generous - but make sure they earn it: a cliff, a vesting schedule, and if you want to go further, performance hurdles tied to the things that matter. You want them as incentivised as you are, and you want that incentive to last.

Setting it up in the UK: EMI

For UK startups, Enterprise Management Incentives (EMI) are worth discussing with your accountant or share-scheme adviser when putting an equity offer together. EMI options can offer tax advantages where the company, employee and grant meet the qualifying conditions. From a hiring perspective, the practical point is to get the structure checked early, so you can explain the offer clearly to a candidate.

I use and recommend Vestd for the cap table, the EMI valuation and the HMRC filings. That’s a referral link: if you sign up through it you can get up to £1k discount. SeedLegals and Ledgy do the same job if you’d rather.

Ways to go wrong

Granting from a pool that doesn’t exist yet. Agree the option pool with your investors before you promise percentages. A 1% grant from a 10% pool is a different thing from a 1% grant when there’s no pool and it’ll come out of the founders’ shares.

Quoting percentages without saying of what. “1%” means nothing until you say whether it’s of fully diluted capital today, or post the round you’re about to raise. Experienced candidates will know the difference.

Treating the cliff as optional. A one-year cliff is a perfectly reasonable condition and should apply to everyone however senior. Don’t let enthusiasm for a hire - or pressure from a candidate - persuade you to waive it.

Not talking about it until the offer. By the time you send the offer letter, equity should already be agreed. I handle these conversations on your behalf throughout the search.

If you’ve got a senior hire in progress and want a second opinion, get in touch.