Article · 15 min read

ESOPs / Employee Stock Option Plans: Structuring for Early Startups

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Once you have decided a key hire gets an ESOP grant and not co-founder shares, this is the India-specific playbook for actually doing it: pool sizing (5% to 15%), the mandatory one-year minimum vesting the Companies Act imposes, exercise price at fair market value, and the DPIIT-recognised-startup carve-outs. It is the practical alternative to over-granting equity, written for the Indian cap table you are actually running.

  • Carve a 5% to 15% ESOP pool and grant a key hire from it instead of founder-level shares
  • Indian law mandates a minimum one-year gap between grant and first vesting; a four-year vest with a one-year cliff is standard
  • DPIIT-recognised startups get specific ESOP exemptions, so recognition status changes what you can grant and to whom
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It answers 3 questions

  1. As a solo founder, how much equity should I give the first employee or advisor who is helping me before I can pay a salary?
  2. How do I make a compelling offer and close a candidate who has a competing offer from a big company?
  3. What's the difference between a co-founder and an early key hire, and how do I decide which I need?

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  3. This is the durable reference for the structural line between a co-founder and a hire: co-founders own the company outright on... Index Ventures Article · 20 min read Rewarding Talent: Founders, Investors and Employees Index Ventures
  4. This is the empirical spine for the employee half of your answer, built on Carta data from 50,000 real cap tables, not opinion.... SaaStr Article · 8 min read How Much Equity to Give Your First Employees: The Real Data from 50,000 Startups Jason Lemkin
  5. This is the single best playbook for the exact call you are dreading: the candidate has a bigger offer and you have to close... First Round Review Article · 18 min read Make Stronger Offers to Engineering Candidates and Boost Your Closes Adil Ajmal (CTO, LendingHome), via First Round Review
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