ABCDEFGHIJKLMNOPQRSTUVWXYZ
1
2
Option pool scenarios
3
4
The purpose of this model is to:
5
a) Determine the needed pool amount
6
b) Determine the multipliers used to calculate grants
7
8
How multipliers work:
9
It is the most common to allocate equity based on seniority with a multiplier on the salary.
10
Example: If you start as a junior software developer at a 60k salary, you might get 20% of that in equity value, i.e. 12k in equity value, based on the current valuation.
11
Commonly the multiplier increases with seniority, that means grants grow more than linearly with seniority.
12
It is common to make allocation independent of location, as equity is a more long-term form of compensation that rewards building the company together, and is less connected to cost of living.
13
The "US benchmark" multipliers in the "model" sheet are based on US data from Pave. They should be taken as an inspiration, not a hard rule, because:
14
Multipliers can vary depending on the stage of the company. The later stage with higher valuation, the higher the percentage multiplier can be. Often companies adjust them once every 1-3 years.
15
Another good resource for the multipliers is index ventures option guide: https://www.indexventures.com/rewardingtalent/calculating-initial-grants-at-series-a
16
17
How to use this model:
18
1. Add your valuation and current headcount
19
2. If you have a fixed percentage of equity to work with, add this to see if you're staying within that constraint
20
3. Play with the multipliers and hiring plan in the different scenarios to understand which multipliers to set
21
22
If you have any feedback on this sheet, just reach out to ben@ledgy.com!
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100