A clean, transparent offer letter does three things: it sells the role, it sets clear expectations, and it protects both sides if something goes wrong. Most founders' first offer letters do none of these well.
What goes in the offer
- Role title and reporting line.
- Base salary and any benefits.
- Equity grant: number of options, percentage of fully-diluted, strike price (current 409A FMV), vesting (4-year, 1-year cliff).
- Sign-on bonus if any, and clawback terms.
- Start date and remote/in-person expectations.
- Standard at-will employment and confidentiality clauses (your lawyer's template handles these).
- Offer expiration: typically 7 days. Forces a decision.
Equity bands by stage and role
Approximate ranges. Wider at very early stage; tighter at later stage.
| Role | Pre-seed | Seed | Series A | Series B |
|---|---|---|---|---|
| Eng #1 | 1.5–3% | 0.7–1.5% | 0.3–0.7% | 0.15–0.35% |
| Eng #5 | 0.4–0.8% | 0.25–0.5% | 0.15–0.3% | 0.08–0.18% |
| Senior IC | 0.7–1.5% | 0.4–0.8% | 0.2–0.5% | 0.1–0.25% |
| VP / Director | 1.5–3% | 1–2% | 0.5–1.2% | 0.25–0.6% |
| VP Eng / CTO hire | 2–4% | 1.5–3% | 0.8–1.5% | 0.4–0.8% |
| First Sales Hire | 0.7–1.5% | 0.5–1.0% | 0.25–0.5% | 0.1–0.25% |
Numbers vary by geography, sector, and competition. Look at AngelList Talent or Pulley's open data for current benchmarks.
Standard vesting
- 4 years total vesting.
- 1-year cliff. 25% vests at the 1-year mark; the rest monthly.
- Standard 90-day post-termination exercise window. Some companies extend to 7-10 years — increasingly common as a candidate-friendly term.
- Double-trigger acceleration. Acquisition + termination = vest acceleration. Single-trigger (immediate vest on acquisition alone) is rare and not standard.
Common negotiation lines candidates push on
- Equity %. Most candidates don't know your bands. Stating yours at the start ("our band for this role is 0.5–0.8%") frames the negotiation honestly.
- Strike price clarity. "What's the current FMV?" Answer with the 409A number. Senior candidates appreciate the transparency.
- Extended PTE. Many candidates ask for a longer post-termination exercise window. Decide your policy upfront and apply it consistently — case-by-case decisions create resentment.
- Sign-on bonus to cover unvested equity at current job. Common for senior candidates leaving big-tech roles. Cap at 1 year of unvested equity equivalent, with a clawback if they leave within 12 months.
- Salary above band. If you can't move salary, consider extra equity. If you can't move either, the role isn't fit.
What a great offer letter looks like
Beyond the legal scaffolding, the best offer letters include a personal note from the founder/hiring manager that:
- Names specifically why this candidate, not a generic "we're excited."
- Describes what success looks like in the first 90 days.
- Acknowledges the trade-offs of joining an early-stage company honestly.
- Closes with a specific next step ("can we hop on a call Thursday to walk through this?").
Common offer-letter mistakes
- Stating equity in number of options without context. "100,000 options" means nothing without the total share count. Always include the percentage of fully-diluted shares.
- No 409A in place when the offer goes out. Sign offers without a 409A and you create tax exposure on day one.
- Promising future grants verbally. If a future grant is conditional, write it down. Otherwise it's likely to be contested later.
- Ignoring relocation. If the role requires relocation, the offer should specify support (or that there isn't any).
- Skipping the start-date conversation. Long notice periods kill momentum. Pre-discuss start date before the offer drops.
Use our stock options calculator to help candidates understand the dollar-value implications of their grant. Transparent equity math closes more offers than salary increases.
FAQ
Should I use a template offer letter?+
Yes. Have your startup lawyer (Cooley, Wilson Sonsini, Gunderson, etc.) provide a template. Editing a battle-tested template beats writing your own and missing required clauses.
How much should I disclose about company financials?+
Be specific about the round you've raised (or are raising), runway in months, and growth metrics. Don't share full P&L. Senior candidates expect transparent context; juniors usually don't ask.
Should I send a verbal offer first or a written one?+
Verbal first, written within 48 hours. The verbal lets you handle reactions in real time and adjust if needed. The written confirms terms cleanly and starts the legal clock.
What if a candidate negotiates significantly higher?+
Hold the line on bands. If they're 30%+ above your top band, either re-evaluate seniority/role or pass — stretch hires are disproportionately likely to leave within 12 months.
Do offer letters need to be signed?+
Yes. Until signed, the offer isn't binding either way. Don't announce hires internally before signed acceptance.