the truth about startup equity in 2026: insights from carta’s data
Episode Transcript
[00:00:00] Hamza Shad: If you want to work at a startup, it's great to know what's happening in the market. So when you're evaluating job offers or considering moving to another company, you know what is common and standard in the market. I think it gives you a bigger picture rather than just being on your own.
[00:00:18] Alicia Thomas: Hey, I'm Alicia, and you're listening to Non-Founder Crew, your insider guide to surviving and succeeding in tech startups. Hello, and welcome to the Non-Founder Crew. Today, we're sitting down with Hamza Shad, Insights Manager at Carta, where he spends his time analyzing the data behind the VC and startup ecosystem.
In this episode, we're using Carta's latest State of Startup Compensation report as a jumping-off point for a conversation I'm calling "the great equity rebalancing." We're going to tackle who is actually getting paid in startup equity right now, why AI and leaner teams are changing the compensation game, and what Non-Founder employees need to understand before they join, stay, or negotiate inside a startup. You won't want to miss it. Let's go! Hi, welcome to the show.
[00:01:05] Hamza Shad: Thanks so much for having me.
[00:01:06] Alicia Thomas: Can you tell us a little bit about the work you do at Carta and what the day-to-day looks like for you?
[00:01:11] Hamza Shad: Yeah, for sure. So I'm on the insights team at Carta, which means I get to work with all of our amazing data on private markets. It covers maybe 50,000 startups based in the US, around a million employees that work at those startups, and around 2,500 venture funds. So I get to dig into the data, find interesting trends, and share them with the broader public. Our goal is to make private markets more transparent, and we do that through regular reports, presentations, and podcasts like this.
[00:01:41] Alicia Thomas: I know from your background that you came from research on entrepreneurship in emerging markets. How did that work influence the way that you look at the work with founders, employees, and opportunity in the private market?
[00:01:54] Hamza Shad: Yeah, for sure. So my last job before Carta was at Endeavor. Through that opportunity, I got to speak with dozens of founders around the world and interview them through surveys to try to understand the challenges they face in scaling up their companies, especially in emerging markets. That really exposed me to the other side of entrepreneurship from the founder's perspective and made studying the market even more interesting for me. Now at Carta, I get to do that at a broader scale with our comprehensive data on tens of thousands of startups, mainly in the US.
[00:02:29] Alicia Thomas: Before we dive into the report, I'd love to just have a better understanding for those who haven't looked at it yet: what is the dataset made up of for this particular report, and what are you guys looking at?
[00:02:39] Hamza Shad: Sure. So we have about a million employees represented in this report who work at privately held, US-based startups. That's before they've gone public; it doesn't include any Big Tech companies, for example. We have data on things like their salary, their equity, how long they've been at the company—their tenure—job titles, seniority levels, when they joined, and, if they left, why they left.
[00:03:06] Alicia Thomas: And I'm curious why you think this dataset in particular is really important for Non-Founder employees.
[00:03:12] Hamza Shad: If you want to work at a startup, it's great to know what's happening in the market. So when you're evaluating job offers or considering moving to another company, you know what is common and standard in the market. I think it gives you a bigger picture rather than just being on your own.
[00:03:28] Alicia Thomas: Yeah, totally. When we look at the report and dive into it, is there anything in particular that you found unexpected or surprised you—maybe a chart or a finding?
[00:03:38] Hamza Shad: I think one thing that did surprise me was the chart on layoffs, looking at how many employees are departing due to a layoff each month. In 2025, we actually had a downward trend throughout the year in terms of layoffs at the companies represented in our dataset. I think layoffs peaked around early 2023 when the downturn was really bad.
That's a bit different from what we've seen or heard about regarding what happened at Big Tech companies, which even throughout 2025 unfortunately continued to lay off more and more employees. But in the startup world, I think the reason that happened was because they had already leaned out so much during the downturn—which was so brutal—that they didn't really have the scope to lay off more employees. At an early-stage company especially, you only have a handful of employees anyway.
[00:04:28] Alicia Thomas: So you think the narrative that's been written in the media is a bit misleading, especially when it comes to startup employees?
[00:04:34] Hamza Shad: It depends on what part of the market you're looking at. Small companies and growth-stage companies versus Big Tech can have very different trends. In this year, 2026, we have yet to see what will happen, but it could very well change and we could see layoffs across the board.
[00:04:50] Alicia Thomas: Carta's framing in the report is that startups have shifted from "building to hire" to "hiring to build," and team sizes are shrinking across the board. If you look at a Series D company, it went from an average of 186 people down to 131. When teams stay small all the way to Series D, what does that do to the equity math for employees?
[00:05:13] Hamza Shad: You're right. We're seeing smaller team sizes across the board, especially at those later growth stages. At the earliest stages, it has declined a little bit as well. But across the board, startups are being more intentional in how much they hire and who they hire. You have higher valuations across the board but fewer employees.
So what that translates to is more value being generated per employee across the startup ecosystem. With things like AI productivity tools, you can do more as a single employee, and it's a really exciting time. The optimist in me says that will translate to more equity per employee.
[00:05:49] Alicia Thomas: Right.
[00:05:49] Hamza Shad: And that's kind of what we saw in the report, where a lot of equity grant sizes for ICs (individual contributors) and even managers have been going up. But it will be up to every company; they might treat it differently.
[00:06:02] Alicia Thomas: You mentioned how there's a chart in the report that talks about how employee equity is up overall—I think it's 13% since January 2024. We're seeing that at the manager level as well, but executive equity is only up 1.2%. What's going on there? The conventional wisdom is that the higher you go in a company, the more equity you get.
[00:06:22] Hamza Shad: Totally. I think the conventional wisdom is still correct there; more senior roles will receive more equity. But when we look at just the percentage change since early 2024 over the past two years or so, the lower seniority employees, like the non-executives, have seen a higher percentage increase in the median equity grant that they're receiving. I think that's probably because during the downturn, employee equity grants took a major cut—going down to maybe 60% to 70% of what they used to be before the downturn.
[00:06:53] Alicia Thomas: Oh, wow.
[00:06:54] Hamza Shad: Basically, the way I see it is that there was more scope for those grants to rebound, whereas I don't think that executive equity grants took as much of a hit during the downturn. So they're still growing, but at a slower pace.
[00:07:06] Alicia Thomas: That makes sense. In 2026, when a startup employee gets an equity offer, based on the data that you're seeing, what question do you think they might be getting wrong? Or where's the gap between how employees are thinking about their equity and what the data is showing?
[00:07:22] Hamza Shad: I think one issue we often see is ascribing a dollar amount to the equity. I think that can be a mistake, especially at a very early-stage startup. As you know, unfortunately, most startups aren't going to have a massive exit, or even an exit at all. When you're at an early-stage company, you're so far from an exit, and there also is no liquidity. So ascribing a dollar amount doesn't really make that much sense. Looking at the percentage ownership in terms of fully diluted equity makes a lot more sense and using that to compare across offers.
[00:07:53] Alicia Thomas: Interesting. Always thinking about the big picture is so important for these.
[00:07:57] Hamza Shad: Yeah, and that's different from a Big Tech company. If it's already publicly traded, there's a very clear dollar value to the equity, and it's very liquid. So you have to look at where you're working.
[00:08:10] Alicia Thomas: Totally. One of the big takeaways from the report is that AI founders are keeping more equity at every stage. So if you look at the numbers, it's 20.4% at Series C versus 16.2% for non-AI founders. Can you walk me through what's actually going on? Is it bigger rounds, higher valuations, smaller option pools, or something else?
[00:08:30] Hamza Shad: It's a great question. I think it's mostly the valuation piece of it. I haven't seen much evidence that the size of the equity pool for employees has changed much between AI versus non-AI companies. That seems to be pretty comparable in terms of the amount of equity they're reserving for their employees.
But when we compare AI and non-AI companies, the AI premium is definitely something we've seen in fundraising. For both round sizes and valuations, AI companies have a much higher amount now compared to non-AI companies. But the valuations have been increasing more rapidly than the round sizes have. Dilution is a simple equation of just round size over post-money valuation. So if the denominator there is increasing faster than the numerator, the overall number is going to go down. So we're seeing AI companies get less dilution per round than non-AI companies, and that's why founders are holding on to more equity throughout the stages as they grow.
[00:09:31] Alicia Thomas: Got it. Dilution—everyone's favorite.
[00:09:33] Hamza Shad: Exactly.
[00:09:35] Alicia Thomas: We're talking about equity in AI companies. At startups that are valued between $1 million and $10 million, AI engineer grants are up 64% over two years, which is incredible. I mean, talk about a rocket ship in terms of a chart going up and to the right. What does a grant size at that stage actually look like in practice?
[00:09:52] Hamza Shad: Firstly, I'd say it's amazing to see. We're really seeing a talent war at early-stage startups for those AI and machine learning engineers. Their compensation packages, especially in terms of equity, have really skyrocketed. I think that's because the time to build and scale has shrunk. You have to work quicker, and that's why founders want to bring on top talent really quickly and get to the market before their competitors.
When we look at the actual grant size, a company that's valued between $1 million to $10 million is pre-seed right now based on current market data. At that stage, you might have one, two, three, four, or five employees—not that many. So we're looking at a founding team member. If you're an AI engineer hired as a founding engineer at your company, I think that grant size might be 1%, 2%, or even 3% of fully diluted equity. Across all startups, we see usually a median of around 1% for the first hire.
[00:10:48] Alicia Thomas: Right.
[00:10:48] Hamza Shad: And so now if you add that that first hire is an engineer and they're on an AI team, it's probably going to be a little bit above the median that we're seeing in the whole dataset.
[00:10:56] Alicia Thomas: Which is a generous grant size and pretty much tracks to traditional SaaS in terms of being the first engineer employee.
[00:11:02] Hamza Shad: Exactly.
[00:11:02] Alicia Thomas: So it's staying roughly the same. Just the amount of money being raised is very different.
[00:11:06] Hamza Shad: Yeah, definitely.
[00:11:07] Alicia Thomas: Option pools at the median stay below 20% all the way through Series E and beyond. For a Non-Founder thinking about joining a Series C company, what does it actually mean to be hired into a 16% option pool that's already been partially spent?
[00:11:23] Hamza Shad: I don't think it being partially spent will be that much of an issue because that's usually factored into the pool size itself. At every fundraise, a certain amount of shares are reserved for future hires. Typically, at every stage that the company goes through, they'll increase the size of the option pool a little bit.
At Carta, we usually see that when companies are founded, they might have around an 8% or 10% fully diluted option pool size. But as they go through fundraising stages and grow, they add a couple of percentage points to that and get to around the 20% mark, like you mentioned, if they're a really late-stage, mature company. So what they would expect around Series C is that it's going to be a smaller grant size in terms of fully diluted equity than if you're joining a really early-stage startup. But I think that's the natural trade-off because the equity is derisked a little bit. There's a higher likelihood that that equity is actually going to be worth anything. So that's why someone at a Series C startup might see a smaller percentage size of their grant than a Seed or Series A startup employee.
[00:12:30] Alicia Thomas: As we look to the rest of 2026, I'm curious what you are anticipating to be the most different year-over-year for this type of report. I know you do it every six months, but if we look at the data between last year and this year, what's the trend you're most interested in watching, and what do you think might look really different for the data?
[00:12:49] Hamza Shad: I love this question. I think there are two things that I'm really looking at. One is just the overall number of hires each year because this past January 2026 was the lowest January on record in our dataset in the past eight years for the number of hires.
[00:13:05] Alicia Thomas: Okay.
[00:13:05] Hamza Shad: So that is a bit concerning, and there is the whole fear around AI replacing jobs and whether we will see more hiring or not in the economy. On the flip side, we are expecting to have three really large IPOs soon: Anthropic, OpenAI, and SpaceX. The effect of those on the ecosystem will be interesting to track because there's going to be a lot of liquidity returning to LPs who invested in those companies. Once their lockup period is over—which is about six months—I'd expect a lot of that capital to be reinvested into the startup ecosystem, which would hopefully then create more capacity for startup hiring and growth. So that's a 6- to 12-month trend we'll have to wait and see play out.
The other thing I'm really interested in tracking—which we don't have a chart for yet, so it would be a new chart in our report—is how job titles are evolving.
[00:13:56] Alicia Thomas: Yeah?
[00:13:57] Hamza Shad: We're in a bit of a pivotal moment right now where the boundaries between a lot of roles are melting away or being blurred. There's the rise of this title, for example: "forward-deployed engineer". What that means is now that you've been able to automate a lot of your work as an engineer, you can spend more time with prospects and customers, learn more about what's needed in the product, and then that should feed back into even better engineering.
On the other hand, for go-to-market roles like sales, marketing, and business dev, we're seeing more "Vibe Coding" so you can build tools, dashboards, and automate workflows. It will be really interesting to see how job titles evolve and what it really means to work at a startup—if we'll all maybe be more generalist or have a wider scope to our work.
[00:14:49] Alicia Thomas: Definitely. I hadn't thought about that. The evolution of job titles is really interesting. Is that a metric that you guys track or could look at?
[00:14:55] Hamza Shad: We could. The report that we published currently didn't look at that, but we do have access to the job titles of the employees that are on our platform.
[00:15:04] Alicia Thomas: Are you guys cooking up anything interesting at Carta? Anything else coming down the pipeline?
[00:15:08] Hamza Shad: Yeah, we're starting to develop some interactive data tools that will allow people to just play around with our data on their own. They won't just have to look at a static report, but can actually interact with the data and maybe query it on their own. So in the coming months, we're hoping to release a couple of tools like that and see what people think.
[00:15:30] Alicia Thomas: For a data nerd like myself, that sounds like a really fun thing to play with.
[00:15:33] Hamza Shad: We'd love your feedback, so we'll definitely send it your way.
[00:15:37] Alicia Thomas: If people want to check out the report and they want to keep in touch and see what you guys are up to, what's the best way for them to follow Carta? Is it email or social, or what would you recommend?
[00:15:47] Hamza Shad: Our homepage for the Carta Insights team is carta.com/data.
[00:15:51] Alicia Thomas: Okay.
[00:15:52] Hamza Shad: So it's an easy URL. You can go there and sign up for our newsletter. We send out updates every week and publish reports every couple of months on different topics: startup fundraising, VC fund performance, private equity trends, and employee compensation. We cover all these different topics in the private market ecosystem.
You can also connect on LinkedIn with us, with me, and with Carta as a company overall.
[00:16:15] Alicia Thomas: All right, you heard it here. Connect with Hamza on LinkedIn.
[00:16:20] Hamza Shad: For sure.
[00:16:20] Alicia Thomas: Well, thank you so much for coming on and talking to us all about the report. If you haven't downloaded it already, everyone should go check it out. It's got some really good, juicy information, and I'm very curious to see what the report looks like in six months' time. I think that there will be some very interesting changes, especially as we see the IPOs of Anthropic, SpaceX, and others happen and some of that money come back to the market in terms of vesting.
[00:16:42] Hamza Shad: Exactly. Stay tuned for more data.
[00:16:44] Alicia Thomas: Cool. Well, thank you so much for coming on.
[00:16:45] Hamza Shad: Thanks for having me.
[00:16:47] Alicia Thomas: Thank you for listening to Non-Founder Crew. If you want more insights, learnings, and stories from the trenches, sign up for my newsletter by going to www.nonfoundercrew.com. And hey, listen: if you know a friend who could stand to hear this advice, send it to them. See you next time!