Background Note | HBS Case Collection | March 2015

Equity Compensation in Startup Ventures

by Ramana Nanda, Robert White and Stephanie Puzio

Abstract

Setting equitable and "market" level compensation for founders and early employees of startups is one of the most important elements of a new venture. It is not only central to attract and retain the best human capital for the startup, but is critical to align incentives between investors and management. This note provides a framework to think about compensation in startup ventures and is intended for entrepreneurs thinking about starting a venture, as well as for employees looking to join a young high-potential startup.

Keywords: entrepreneurial finance; equity; Finance; Entrepreneurship;

Citation:

Nanda, Ramana, Robert White, and Stephanie Puzio. "Equity Compensation in Startup Ventures." Harvard Business School Background Note 815-074, March 2015.