Equity for a first employee
lportnoff: 1% could be too high and 5% too low.  I have always operated under the assumption that to pay someone fair value is important. So if someone is coming on board and taking risk, that risk needs to be compensated.  Usually we have brought people in at below market wages and made up the difference in the form of options which get them "whole" on total comp.  (However, we do make sure there is a vesting schedule which is appropriate to the circumstances).  Valuing each of the pieces can be easy if you already have a round out there and can model the options.  Any skilled financial profesional can help on this, if internal resources are insufficient to do so.I should note, we are never addicted to outside money.  We try to bootstap as much as possible and plan always to make it without taking in funds which may prove costly or hard to get.  In other words, we always try to manage our cash carefully and not take VC or angel fund unless absolutely necessary.