Is there a formula for calculating equity distribution among startup employees?

No. Depending on your stage of development, there are companies with salary surveys which tell you what the industry is doing.

See, for example, http://www.advanced-hr.com/

Answered 11 months ago by Mike Prozan

I am guessing that in your case there is a founder or group of founders and that you are hiring your first wave of employees and because the salaries of these employees is much lower than market you are compensating them for this with equity. If this fits your situation, my experience has been that the range is typically 1 to 5% of the company - depending on the expertise of the employee and whether the employee is critical to the company. But I have also seen plenty of exceptions to this range - especially when the employee being hired is savvy (i.e., has done a start-up gig before) and knows that if there is a financing event in the future, he/she is going to be diluted heavily.

Answered 11 months ago by Justin Call

From the Resource Center: How to Divide Equity to Startup Founders, Advisors, and Employees - http://www.mosaichub.com/resource_center/resource/how-to-divide-equity-to-startup-founders-advisors

Answered 11 months ago by Stephen Fiedler