That's a good question, and depends on a lot of factors.
I'm going to assume we're talking about employee equity, and not founder equity. If you signed on at a reasonable salary, then you're an employee. If, on the other hand, you worked without pay until the company got to the point where a salary was possible, then you're a co-founder.
For a first employee, somewhere between one and five percent makes sense to me. Exactly where the number falls depends on their role, as well as small details like company funding structure, cashflow at time-of-hire, etc.
The next two to five or so employees would be somewhere around one percent.
After that, the number starts diving rapidly, with a total employee ownership converging to a number near ten percent or so.
In my experience, this is more than a lot of startups offer, and feels fair in terms of risk.
On top of the equity, though, I think that profit-sharing is also important. Not as a mechanism for motivation, but as a means of retaining talent. Exits are few and far between, and it's quite easy to screw over minor shareholders. An annual bonus check based on company performance goes a long way towards showing personnel that you're serious about the idea of "if the company succeeds, you succeed".
At the end of the day, no matter how much equity gets passed around, it's unlikely to pay out big unless your company goes public.
Too many companies attach conditions to their equity and too many acquiring investors and big companies will readily dilute employee shares to sweeten the equity deals for founders and early investors.
Thats why sweating hard times out for equity is a hard sell to engineers these days. There's too many ways for equity to be worthless paper later on and there's countless examples of it happening recently (e.g. Skype, Zynga, etc).
Hence the profit-sharing. If the company never gets, or was even aiming for, a big exit, but instead turns into a long-term sustainable business, then as an employee you still get a cut of the success you helped create.
I'm going to assume we're talking about employee equity, and not founder equity. If you signed on at a reasonable salary, then you're an employee. If, on the other hand, you worked without pay until the company got to the point where a salary was possible, then you're a co-founder.
For a first employee, somewhere between one and five percent makes sense to me. Exactly where the number falls depends on their role, as well as small details like company funding structure, cashflow at time-of-hire, etc.
The next two to five or so employees would be somewhere around one percent.
After that, the number starts diving rapidly, with a total employee ownership converging to a number near ten percent or so.
In my experience, this is more than a lot of startups offer, and feels fair in terms of risk.
On top of the equity, though, I think that profit-sharing is also important. Not as a mechanism for motivation, but as a means of retaining talent. Exits are few and far between, and it's quite easy to screw over minor shareholders. An annual bonus check based on company performance goes a long way towards showing personnel that you're serious about the idea of "if the company succeeds, you succeed".