Startup Offer Letter Templates with Equity: A Practical Guide for Founders and Counsel

Early-stage startups rely on equity-heavy offers, yet many copy‑paste generic letters that don’t match their cap table, option plan, or legal risk profile. This short guide is for founders, recruiting leads, and in‑house or outsourced counsel who need reusable, equity‑aware offer templates.

Unclear or inconsistent offers cause misaligned expectations, tax traps (e.g., missed 83(b) windows), IP ownership gaps, and disputes that can derail hiring or fundraising. These problems often show up against your cap table — see our primer on cap tables and decisions like how many shares to authorize.

This is a practical guide and checklist: it gives a framework, copy‑ready sample clauses, and a checklist to build offer templates covering salary, equity mechanics and vesting, benefits, IP/confidentiality, and approvals — adaptable for employees, executives, and advisors.

Decide What Your “Standard” Startup Offer Looks Like Before You Draft

Define a small set of standard templates — early employee, later‑stage employee, executive, advisor/contractor — so hiring uses vetted language, repeatable approvals, and fewer one‑off equity deals. Mini‑example: a seed SaaS keeps 3 templates (early hire, senior hire, advisor) plus an executive addendum.

Align offers with your equity design — authorized shares, option pool, target grants by level, and advisor norms. Prefer stating a fixed option count tied to current fully‑diluted capitalization (with a dated caveat) instead of an unqualified “1%” promise; see our cap table primer and guidance on how many shares to authorize.

Default US instrument: stock options (ISOs when eligible; NSOs otherwise). Very early or key hires may be offered restricted stock/RSUs. For hires outside the U.S., confirm locally with counsel.

• Pre‑draft checklist: employment vs contractor vs advisor; equity instrument (ISO/NSO/RSU/RS); vesting + cliff; early exercise availability; bonus/variable comp; required board/plan approval.

These decisions create consistent, defensible offer letters and prevent ad‑hoc grants that complicate your cap table.

Spell Out Salary, Equity, and Benefits in Clear, Consistent Terms

Salary and cash compensation

State at‑will employment and present base salary and pay frequency plainly. Sample: “Base salary of $[X] per year, paid bi‑weekly; classification: [exempt/non‑exempt].” For senior roles add: “Target annual bonus of [Y]% of base, subject to Board‑approved bonus plan.” Avoid promising plan mechanics in the offer — reference the formal plan instead.

Bonus and variable comp

Mention only target amounts and that payment is subject to the company bonus/commission plan and discretion. Warning: over‑promising variable pay in the letter creates enforceable expectations if not cross‑referenced to a plan.

Equity grants: make the line item understandable

Describe instrument, number of shares, and an approximate fully‑diluted percent (dated). Sample: “You will be recommended for an option to purchase [Number] shares of Common Stock, representing approximately [X]% of the Company’s fully‑diluted capital as of [date].” See our cap table primer.

ISO vs NSO & early exercise

ISOs are tax‑favored for employees; NSOs are used when ISOs aren’t available. Sample: “If eligible, the grant will be an ISO under the Plan; otherwise an NSO.” State the exercise price (determined by Board/409A). If early‑exercise is offered: “Options may be early‑exercisable subject to the Plan and a separate agreement.” Flag 83(b) timing and advise tax counsel — see 83(b) guidance.

Benefits and non‑equity perks

Summarize core benefits (healthcare, retirement, PTO, equipment, remote work). Add a short disclaimer: “Benefits are summary only; full terms are in company policies and are subject to change.” Avoid promises of perpetual or generous benefits without policy support.

Draft the Vesting Schedule and Cliff So Candidates Actually Understand It

Standard 4‑year vesting with 1‑year cliff

Most U.S. startups use four‑year vesting with a one‑year cliff to align retention with investor expectations (see our vesting primer here).

Sample clause (copyable): “Vesting begins on [Start Date]. 25% of the grant vests on the first anniversary (the cliff); the remaining 75% vests monthly over the next 36 months.” Variant: replace “monthly” with “quarterly” if preferred.

Acceleration, termination, and unvested equity

Standard treatment: unvested options are forfeited on termination; vested options remain exercisable for a limited post‑termination window (commonly 90 days for ISOs). Sample post‑termination clause: “Following termination, vested options remain exercisable for [90] days, subject to the Plan.”

Double‑trigger example (high level): “Upon a qualifying change of control and a qualifying termination without cause or for good reason within 12 months, unvested options will vest as provided in the Plan.”

Early exercise, restricted stock, and 83(b)

Early exercise allows purchase of unvested shares subject to the Plan and a purchase agreement. Early exercisers may file an 83(b) election within 30 days of purchase. Sample notice: “The Company does not provide tax advice — please consult a tax advisor. If you early‑exercise or receive restricted stock, consider whether to file an 83(b) election within 30 days; see our 83(b) guide here.”

Cover the Core Legal Protections in and Around the Offer Letter

At‑will and entire‑agreement

US startups almost always use at‑will employment — state this clearly and include an integration clause so informal promises don’t create enforceable expectations. Sample: “Employment is at‑will; either party may terminate at any time. This Offer Letter and the documents it references contain the entire agreement between you and the Company.”

IP assignment & confidentiality

Make the offer contingent on signing the Company’s Proprietary Information and Inventions Assignment (PIIA) and confidentiality agreement — missing PIIAs are a frequent diligence problem.

Classification & advisor equity

Use separate templates for employees vs contractors/advisors. Document advisor grants in a distinct Advisor Agreement and avoid employee benefit language for non‑employees. Red flags for misclassification: fixed hours, direct supervision, paid benefits. See our Advisor Agreement template for a standard structure.

Build Reusable Templates for Different Startup Relationships

Core components each template should share

• Job/role description and reporting line
• Start date and location (or remote status)
• Cash compensation, equity grant (number + dated %), and benefits summary
• Vesting schedule and key equity conditions
• Legal framework: at‑will, IP/confidentiality, background checks, contingencies (e.g., board/plan approval)

Use consistent equity wording — e.g., “Option to purchase [Number] shares of Common Stock under the [Plan Name]” — so offers map cleanly to your cap table.

Template 1 — Early employee

Recommended order: opening; role/title; salary; equity + vesting (standard 4‑yr/1‑yr cliff); benefits; at‑will; contingent PIIA signature. See our vesting guide and PIIA.

Template 2 — Executive

Add signing bonus, target bonus metrics, severance outline, and clear change‑of‑control/acceleration cross‑references to separate agreements.

Template 3 — Advisor / contractor

No employment language or benefits; reference a separate Advisor Agreement and equity‑for‑services terms. See how much equity to give advisors and equity‑for‑services guidance.

Operationalizing Offer Letters: Processes, Approvals, and Candidate Communication

Standardize a lightweight checklist for every offer: confirm equity pool availability (reconcile with your cap table), confirm instrument/tax classification (ISO vs NSO), secure board/plan approval when required, and coordinate HR/payroll for onboarding.

• Agree on standard language across Legal, Finance, and HR; require written sign‑off for deviations.
• Checklist essentials: available shares; grant type; vesting; exercise price / 409A status; approvals; payroll setup.

Match verbal promises to written terms. Example phrasing: “You were offered approximately 0.5% of the company (fully diluted as of [date]); the formal grant will be 20,000 options under the [Plan], subject to dilution.”

Attach short explainers on options/vesting and 83(b) (see our cap table guide and 83(b) primer), offer a quick call to walk candidates through equity, and maintain a single canonical template with date‑stamped version history and legal review for any changes.

Frequently Asked Questions About Startup Offer Letters with Equity

Q1: Percentage vs fixed number? Prefer a fixed number of options; you may add an approximate fully‑diluted percentage as of a specific date with a clear dilution disclaimer and link to your cap table model (cap table primer).

Q2: Should I mention 83(b)?Not required, but flag it when early exercise or restricted stock is possible and encourage candidates to consult tax counsel. See our 83(b) primer for context (83(b) guide).

Q3: Where do the full legal terms live? In the equity incentive plan, board resolutions, and the individual option/RSU agreement — the offer letter is a summary that should cross‑reference those documents.

Q4: What happens if a hire leaves? Unvested equity is generally forfeited; vested options are subject to the Plan’s post‑termination exercise window (commonly 90 days for ISOs). Always reference the Plan and grant agreement.

Q5: Can I use the same template globally? Core language is reusable, but employment, securities, and tax rules vary — get local counsel and adapt the template (see our offer letter template for a starting point: Offer Letter Template).

Actionable Next Steps

• Inventory your current offer practices and templates; flag inconsistent equity language and any undocumented promises.
• Decide standard equity instruments, vesting schedules, and ISO/NSO policies with input from legal and tax advisors.
• Build or update employee and executive offer templates and a separate advisor/contractor template — start from our Offer Letter Template and Advisor Agreement.
• Add clear cross‑references to your equity incentive plan, PIIA/confidentiality agreement, and 83(b) resources (see our 83(b) guide).
• Set an internal approval workflow for exceptions (Legal + Finance sign‑off) and implement a per‑hire checklist tied to your cap table.
• Have counsel (for example, Promise Legal) review templates for employment, securities, and tax compliance before broad use.

Implementing these steps early prevents cap‑table surprises and reduces costly cleanups during fundraising or exit diligence.