Your star engineer suddenly asks to meet with you. She’s been with you since the seed round, built half your product, and has been vesting her equity for two years. Now she’s holding an offer from a later-stage startup with a fresh equity package worth twice what her remaining vested shares are worth. What do you do?

As a Series A founder, it’s important to plan ahead to retain and motivate your best people through your Series B and beyond. Equity refresh grants are emerging as a smart way to offer additional reward options for top-performing employees. It’s not a one-size-fits-all solution, however. Battery developed this primer in partnership with compensation experts Sequoia Consulting to get you started.

What are equity-refresh grants?

Equity-refresh grants are additional equity awards given to existing employees after their initial grants begin vesting, typically around the two- to three-year mark. Like equity grants offered at time-of-hire, refresh grants can take the form of stock options, restricted stock units (RSUs) or other forms of company ownership.

Think of them as the second act of your equity compensation story. While upfront equity grants incentivize joining your company, refresh grants incentivize strong performers to stay. So timing is important. Companies often offer them in response to significant growth or hitting milestones like a funding round or product launch. But they are also designed to reward individuals who have been critical contributors to hitting those milestones at all.

Three reasons equity refresh grants are becoming popular

Equity-refresh grants have surged in popularity recently due to fundamental shifts in how startups operate. For one, companies are staying private longer than ever. The median time to IPO has stretched from four years in 1999 to 12 years today, which means that employees are waiting longer for that golden liquidity event to finally happen. Without refresh grants, employees who’ve vested most of their initial equity are essentially working for salary alone while watching new hires receive fresh four-year packages.

While tech hiring has been slowing lately, top-performing employees are always in demand. Your best people may be regularly fielding offers that feature brand-new equity packages. Your partially-vested options look stale in comparison.

Then there’s the psychology around dilution: Multiple funding rounds naturally dilute early employee stakes. While this dilution often accompanies value creation, it can demoralize employees who see their ownership percentage shrink with each round. Refresh grants acknowledge this reality and help preserve the ownership mentality that drives performance.

Best practices for equity-refresh grants

Refresh grants can help solve big problems. They extend vesting schedules for employees who might otherwise leave. Considering that hiring and onboarding replacements for senior roles can cost 100 to 200 percent of annual salary, even sizable refresh grants can be a cost-effective retention tool. And of course retention itself helps preserve institutional knowledge and cultural continuity.

At the same time, refresh grants can bring their own set of challenges. Dilution is an important consideration, as is fairness and transparency. Performance criteria need to be clear in order to avoid perceived cronyism. And careful planning is key—once launched, abruptly stopping a program can send a negative signal to employees and investors.

That’s why Series A companies should develop refresh principles before implementing formal programs. One principle that has been gaining momentum is the trend toward performance-based incentives. According to newly released survey data from Sequoia, the number of companies offering performance-based refresh grants rose between 2024 and 2025, from 5% to 6% for non-executives, while it remained flat for executives at about 20%.

Offering performance-based grants early on also helps develop an implementation timeline. As Jin Tan from Sequoia advises: “We typically recommend earlier-stage companies provide refresh grants on an ‘as needed’ basis, and for those with formal programs, every other year. Only the more mature companies would grant refreshers on an annual basis.”

Refresh cycles are often role-specific. A frequent ask from companies is what equity vs. cash compensation they should pay based on their stage. For example: We just raised a Series B round and are ready to bring in a chief revenue officer. What should the comp offer be in terms of cash and equity?

For the majority of smaller companies, the grant cadence is at least two years or longer. As companies mature, the likelihood rises of an annual grant cadence. The most prevalent equity refresh criteria is performance-based. Eighty-eight percent of companies Sequoia surveyed grant equity refresh awards based on performance criteria. While the primary criteria is performance, most companies use a combination of factors, such as tenure and job criticality and level among others.

While the formula varies by company and situation, it’s true that each inflection point requires rebalancing cash and equity. For instance, Sequoia’s recent survey data show a marked decline in the proportion of refresh grants exceeding 50% of a new-hire grant, suggesting refresh awards are increasingly smaller relative to new-hire grants. In other words, while refresh grants are being offered more frequently, they are also being stretched out into smaller increments. Designing refreshes with role-specific timelines helps retain high-value leaders as responsibilities scale.

Founder equity refreshes: How to address this special case

Benchmarking founder equity in particular requires nuance. Founders’ holdings generally include two types of ownership:

• Noncompensatory ownership is awarded for founding the company, typically as common stock or Series A restricted stock awards (RSAs). These holdings dilute through subsequent funding rounds and are not intended to be replenished via refresh awards.
• Compensatory ownership is granted for ongoing service in a founder’s current role. It should use the same instruments as employee grants, such as options or RSUs.

Sequoia’s Jin Tan notes that “companies should view founder refreshes through the lens of compensatory ownership, compensating for the role they serve now rather than what they did before.” He notes that he’s personally designed equity refreshes in which one person (the CEO) gets a CEO refresher, while the co-founder with a COO title got a VP Operations refresh grant because VP-level accurately reflected that person’s current day-to-day role.

What about co-founders who aren’t serving as CEO? Mikey Hoeksema, principal at Battery Ventures, emphasizes that equity refreshes for co-founders outside the CEO role deserve equal strategic attention. Aligning these grants to actual responsibilities and evolving impact promotes fairness and long-term retention.

Early-stage companies should extend the same principle of role-based alignment to their first key hires. As Tan points out above, at this point, refresh grants are best used selectively and sparingly to retain early engineers, operators or executives approaching full vesting. The amount is variable, but typically falls under 20% of the initial, new-hire grant.

The bottom line on equity-refresh grants

Taken together, these trends point to an equity-refresh philosophy that is designed to enhance alignment, accountability and retention. Successful companies calibrate refreshes to both stage and role. That looks like modest, retention-focused grants in the early years and structured, performance-based awards as valuation and metrics stabilize. Across the board, the goal should be to ensure that equity remains a living expression of each person’s evolving contribution to the company’s growth and long-term value creation.