> For the complete documentation index, see [llms.txt](https://handbook.opencoreventures.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://handbook.opencoreventures.com/ocv-employees/vc-ops/company-formation-process/founder-offer-and-equity.md).
# Founder Offer & Equity
Founders (CTOs and CEOs) are always hired as full-time employees. Salaried founders’ employment status should reflect their dedication to the company and help build investor confidence rather than adding unnecessary risk.
Fundraising is about telling a compelling story that convinces investors why they should back a company. If a founder is a contractor rather than a full-time employee, it adds an extra layer of explanation that takes time and energy away from the goal: securing investment. Instead of spending valuable time overcoming that concern, we eliminate the issue by requiring founders to be full-time employees.
## Verbal Offer Letter
After internal approval, OCV team prepares a verbal offer (via email).
Verbal offer details
1. Company Name (typically TBD)
2. Entity Structure (C-Corp or PBC)
3. Title
4. Annual Compensation in local currency (and \~USD equivalent)
5. Equity (% and vesting details)
6. Confirm whether founder would like to [purchase common shares](/company-ops/finance-ops/equity-ops.md#founder-share-purchase) or receive options
7. [OCV Funding](https://handbook.opencoreventures.com/company-formation/step-7-fund-the-business/) detail with note around SAFE dilution: *"Please note that the SAFE will convert into future preferred shares and will dilute all existing shareholders upon conversion. To protect potential dilution prior to the next round of equity financing, we’re reserving a X% options pool (for CEO and other employees)."*
8. Options Pool size
9. Target Start Date
10. Confirm purchase of existing domain name(s) for USD 1 (if applicable).
In this email, we also request founder’s mailing address, phone number, date of birth (for certain registration and banking system setup requirements).
Once a founder provides verbal acceptance of our offer, follow the process outlined below to draft and send out an indicative offer letter via DocuSign.
## Indicative Offer Letter
Founders will be employed by their company’s EOR provider. OCV sends out an indicative offer letter to document compensation, equity, and prior inventions (if any) in the ECIIAA. Founders will receive an official offer letter through EOR provider once the company has been formed in the weeks following receipt of their indicative offer letter.
Basic offer letter fields:
* Founder name
* Company legal name
* Country of employment
* EOR provider (as formal employer)
* Position
* Start date
* Home office location
* Employment status
* Compensation
* Equity
Founder offer letters will need to include the following information:
**Compensation**
* Base salary amount in local currency (use proper 3-letter currency label before amount)
* Payment schedule (monthly in arrears)
**Domain**
If the Company is purchasing any existing domain names from the founder, include:
> “The Company will purchase the existing domain names related to \[Open Source Project Name] for USD $1. These domain names will be transferred back to you in the event of a company wind down.”
The purchase of domains by the Company will be reflected as part of the Founder Common Stock Purchase Agreement (Exhibit B - Assignment Agreement).
**Equity**
See below for OCV’s guidelines on founder equity. Equity section of the indicative offer letter must contain:
> “All equity grants are subject to dilution with each new funding round.”
As of May 2025, founder (CEO & CTO only) offer letters include terms for [double-trigger accelerated vesting](/company-ops/finance-ops/equity-ops.md#accelerated-vesting).
### Intellectual Property (ECIIAA)
OCV offer letters will include a standard Employee Confidential Information and Inventions Assignment Agreement (ECIIAA), which complies with the [employee confidentiality and intellectual property rules](https://www.sec.gov/Archives/edgar/data/1029125/000143774920017410/ex_198816.htm) established at the federal level by the Securities and Exchange Commission.
Prior intellectual property is typically something where the founder has existing IP protections such as a patent or trademark, this disclosure does not usually apply to the open source software a company.
In addition, OCV offer letters will also include a non-solicitation clause in order to avoid potential conflicts of interest.
## Equity Guidelines
{% hint style="warning" %}
**Disclaimer - The following guidelines are:**
1. Subject to change
2. Not a guarantee that anyone will get any specific equity stake
3. Not necessarily a perfectly up-to-date reflection of current frameworks
4. Not going to impact past dealings. We will stick to the terms of previous arrangements regardless of whether they are higher or lower than the current framework.
{% endhint %}
### CTO
CTO equity follows a base-plus-additive model, starting at a minimum of 10% (in line with Y Combinator founder norms) and capped at 25%.
Additional equity may be granted based on the following criteria:
* +5% if the CTO is an active contributor to the open source project
* +5% if the CTO is the original author of the open source project
* +5% if the CTO is the first C-level hire and brings management or entrepreneurial experience
All CTO shares vest over four years (48 months) with a six-month cliff and double-trigger acceleration.
If OCV begins assembling a team before a CTO accepts their offer, the original equity offer remains valid for six months from the company's launch date. After that point, the offer is reduced by 5%.
### Founding Engineer
In certain situations, OCV may start companies with a founding engineer instead of a CTO. In cases where we recruit a Founding Engineer from outside of the community, but someone with the potential to take on the CTO role at a future date, the standard equity package is 2.5%. If and when the Founding Engineer takes on the CTO role during the pre-Seed stage, the equity package will be reevaluated with a maximum total offer of 15% (inclusive of the initial 2.5%).
Note: this role is not the same as the first engineering hire (someone who is not anticipated to take on the CTO role at a later date). Equity offers for first engineers follow the same process as Equity grant considerations.
### CEO
OCV's standard model is to launch with a technical co-founder (CTO) first and recruit a CEO shortly after. CEOs joining post-launch receive stock options from the company's options pool rather than founder shares. In special circumstances, OCV may launch with only a CEO, or with both a CEO and CTO together. In those cases, CEO equity at launch would follow the same guidelines as the CTO.
### Founding Advisor
A *Founding* Advisor — an advisor or project author who played a meaningful role in making the company launch a reality — is by OCV invitation only and is not a self-nominated process. For advisors joining after company formation, see [Advisors](https://handbook.opencoreventures.com/startup-manual/business-operations/advisors).
Founding Advisor equity starts at a minimum of 0.25% and is capped at 2.5%, with additional allocation based on the following:
* +up to 1.5% if the advisor is the original author of the project (assuming a single author)
* +up to 0.25% if the advisor provides regular monthly advisory time
* +up to 0.5% if the advisor is actively involved in building the business — for example, contributing to brand building, customer introductions, or recruiting. Note that open source contributions (merge requests) do not count toward this criterion.
All advisor shares vest over four years (48 months) with a six-month cliff.
## O-1 Transfers
{% hint style="info" %}
**O-1 transfers are only available for company founders. Estimated Cost: $15,000 to $18,000**
{% endhint %}
O-1 visas are for individuals who possess extraordinary ability in the sciences, arts, education, business, or athletics, etc. O-1 visas can be transferred, and the transfer process may be easier if the beneficiary (i.e., founder) has a copy of the complete O-1 filing. It is favorable if the beneficiary has already been approved for an O-1 visa. The new O-1 filing will be separately assessed by USCIS.
A US legal entity must be established first before an employment-based petition can be filed with USCIS. \[To be confirmed with legal team]: founders can still [purchase common shares during the company formation process](/ocv-employees/vc-ops/company-formation-process/issue-equity-and-options-pool.md).
After the legal entity has been established, the company's EOR acts as the official sponsor and handles the full visa and legal process. The EOR charges an additional monthly fee for this service on top of its standard monthly fee.
### O-1 Visa Transfer Process
The standard EOR processing takes 14 weeks from start to finish, though premium processing (for an additional fee) reduces this to about 10 weeks.
The timeline varies based on information gathering and government response times for the transfer petition. Since O-1 is one of the most complex visa types, having a copy of the prior petition can significantly speed up the preparation process.
Transfer process:
1. Sign EOR engagement letter
2. Complete intakes
3. Attorney case kickoff call with case planning
4. Case building (8 weeks, or 4 weeks with fast-track)
5. Ship with premium processing (15 days)
6. Approval or request for evidence
---
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