The best startup offer letter for employment you have ever seen

Tl;dr: A beautiful startup offer letter you can use for inspiration when making offers to your startup staff

If you as a founder are a little clueless about how shares and options work, trust me, your staff are even more clueless. So clueless (for the most part in many countries) that many don’t even see the value in owning stock in your startup. Seriously.

So when you are making a job offer (and trying to screw the thumb on salary), it’s important that the staff actually understand what you are offering… or at least that these option thingies are worth something. Otherwise, you aren’t exactly incentivising them, motivating and create the sense of ownership you thought you were.

One great opportunity to educate staff when they join is even before they join! Your startup offer letter.

Carta (Now called eShares) publicly released a ‘Better Startup Offer Letter’, based on the one sent to their own staff, for other company founders to use as a template. The innovative format uses visuals and plain English to explain how much the employee has been offered, what ownership percentage their shares represent, as well as their estimated payouts based on different exit scenarios. It also includes details of the company’s capital structure and explanations of complex terminology like ‘common’ and ‘preference’ shares.

In the words of the CEO:

At Carta we spend a lot of time thinking about how to better educate employees on startup equity. Even new hires at Carta often don’t understand the equity compensation component of their offer letter. So we decided to create a new offer letter.

It’s pretty sick, to be honest. I have no idea how much time they spend making each and every one of these.

You can download the startup offer letter Keynote version here

Let’s check it out.

If you are looking for more great things to read…

• This is how to get introductions to venture capital investors for your startup fundraise
• Why I want a pitch deck before a pitch
• Why you are making a financial model for your fundraise is wrong
• What’s your startup valuation is the wrong question. Here’s why and what the better approach is

The startup offer letter, slide by slide

The front page…

 

Cover page to the new staff

A fancy looking welcome letter

Summary of the offer

Simplified graph of our capital structure and breakpoints

Formula for setting salary

Simplified graph of our capital structure and breakpoints

Formula for calculating option payouts for exit values greater than $77M

Tranche-by-tranche table of employee’s vesting schedule

Brief advice on how we encourage employees to think about their equity

Overview of staff benefits

Home office address and weekly commute schedule (for San Francisco)

Home office address and weekly commute schedule (in Palo Alto)

Introduction to first week’s schedule and 1-on-1s

Required legal language regarding option details and pending board approval

Signature page, where you sign on the line that is dotted…

Big blue ending page. Whoop whoop

If you want the editable file, you can get it below.