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How to Get Top Talent When You Have a Bare Bones Budget Your startup isn't generating enough cash to pay decent salaries. Now what?

By Sam Hogg

This story appears in the December 2015 issue of Entrepreneur. Subscribe »


Recruiting talent for startups is often referred to as "selling dreams," because there's never enough dough to pay people what they deserve. Compensation packages are usually a mesh of modest salaries, opportunistic equity stakes and access to office ping-pong tables. Equity may sound great at first, but the allure of owning part of the next billion-dollar company loses its luster when that unicorn starts to look more like a starving pony.

A question VCs often get from founders is how to secure the best talent without breaking the (often very small) bank. While there is no standardized formula, the theme we emphasize is transparency. Using equity to recruit talent is more complicated than divvying out pieces of pie, and finding the right balance of cash and equity for employees relies on everyone knowing what they are getting into. Here are highlights of what you need to discuss.

Equity vs. Options

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