Hiring the minus-one team before funding or PMF

1. Core idea and who it's for#

The minus-one team is the handful of people who join before you've raised a proper round or found product-market fit. Typically there are one to four of them: the first scientist or engineer who isn't a founder, a lab or hardware specialist, sometimes an operations person. They take the most risk and get the least cash, and they shape the company more than anyone except the founders. In deeptech, they often decide whether the prototype works by the time of the seed raise.

Hiring this early is unusual now. Founders are staying lean longer, and most first hires happen after money arrives (section 2). The main principle is: hire before funding only for work that is on the critical path to your next milestone and that founders can't do, and structure each offer so that both sides survive if the money is late.

The three hard problems are:

1. Who. You need someone who can work without structure, cover more than one job, and accept risk. That is usually someone you already know, a former lab colleague, or an alumnus of your institute.
2. Paying them. Options include below-market salary plus a large grant (5.04), deferred salary, an offer contingent on funding, grant-funded positions, part-time or consulting arrangements, and fellowship-funded roles.
3. Doing it legally. Contracts, IP assignment, payroll, visas and the risk of misclassifying someone as a contractor all apply from the first hire, even before the company has money (section 4).

Who this is for: pre-seed deeptech founders who need a key technical person before the seed round, and early employees weighing a minus-one offer.

2. Evidence: how early teams are being built now#

Founders are waiting longer to hire. On Carta, the median time from incorporation to the first hire rose from 214 days in 2019 to 284 days in 2024 , with founders leaning on AI tools and staying lean (Carta). The average seed-stage team shrank from 10.3 employees in 2021 to 6.2 in 2025 (SaaStr, on Carta's State of Seed).

Deeptech is different. Software founders can often build alone with AI tools. Hardware, wet-lab and instrument startups usually need hands in a lab before the seed round, which makes the minus-one hire more common and more important.

Minus-one hires get the most equity. The median first hire receives about 1.5–1.75% of fully diluted equity, with a 25th–75th percentile range of roughly 0.5–4% (SaaStr, citing Carta; Carta H1 2026). In biotech, the first-hire median is about 2% (Carta). The wide range reflects how much the deal depends on salary sacrifice and timing (5.04).

Underpaying the first hire is expensive. One practitioner guide, using Carta and Pave data, suggests:

• below about 70% of market salary, you tend to lose candidates to competing offers;
• above about 90%, the trade for equity loses its point;
• the cost of a bad first hire is conservatively 6–12 months of their salary (DEV Community).

Recruiters charge about 20–25% of first-year salary, which is why most first hires come through warm networks.

Where minus-one hires come from in deeptech. The usual sources are:

• the founders' lab, especially postdocs and research engineers (2.13);
• former colleagues from industry R&D;
• alumni networks of the founders' institutes;
• fellowship programmes that fund a person to join (1.10).

The common thread is trust that already exists . An offer based on deferred pay or an uncertain seed round only works when the candidate already trusts the founders.

3. Method: decide, find, structure, document#

Step 1. Prove the hire is needed now. Write one paragraph:

• what milestone this person unlocks, such as a working prototype, first pilot data or a grant deliverable;
• why the founders can't do it;
• what happens if you wait until after the seed round.

If the answer is "it would be nice", wait. If it's "we can't raise without it", hire.

Step 2. Choose the engagement model. There are five common options:

Step 3. Size the offer. Use the L1 band (5.04): about 0.75–2.5% for hires 1–3. Move up for salary sacrifice, scarcity and how early they join. Show the trade explicitly: market salary, offered salary, the gap, and the value of the equity at the last price or a reasonable valuation.

Step 4. Protect both sides in writing.

• An employment contract or consulting agreement, with a confidentiality and IPassignment clause covering everything made for the company (2.01).
• A grant agreement with standard vesting: 4 years with a 1-year cliff. Consider giving credit for months already worked part-time.
• For deferred pay: a written note of the amount owed, when it's paid (on closing a round of at least $X, or by a date), and what happens if the company fails.
• For contingent offers: the funding condition, a deadline, and what happens if the deadline passes.

Step 5. Set up the basics before day one. Register for payroll, get the right insurance, complete right-to-work checks, issue confidentiality agreements, and give access to data on company-owned systems, separate from the university's (2.14).

Step 6. Treat them as part of the core. Minus-one hires should see the fundraising plan, the investor feedback and the runway. Their risk is close to a founder's, so their information should be too.

Worked example (illustrative)#

A founding team spinning out a microfluidic diagnostic needs a device engineer to build a manufacturable prototype before the seed raise, which is 5–6 months away. They have $400,000 of pre-seed SAFE money and a $150,000 grant.

• Candidate. A former lab-mate, now at a medtech company earning $150,000.
• Offer. Full-time at $110,000 (73% of market), plus 2.0% of fully diluted equity, vesting over 4 years with a 1-year cliff. At the SAFE's $8M post-money cap, that's worth about $160,000.
• Contingency. If the seed round closes within 9 months, salary rises to $140,000, and the gap of $30,000 a year from her start date to closing is paid back as a bonus at closing.
• Paperwork. Employment contract with IP assignment; option grant (or restricted stock with an 83(b) election, given the low price); a written retention-bonus letter; a check that her medtech employer's IP clause doesn't cover microfluidics work she did there (1.15).
• Outcome. The prototype is ready in month 5. The seed round closes in month 7, and the bonus of about $17,500 for 7 months is paid at closing.

4. India / US / UK differences#

India#

• Labour law. India's four labour codes came into force in November 2025, replacing many older acts. Check the current state rules on registration, wages and social security with an adviser. Under the older thresholds, EPF applied at 20 employees and ESI at 10. Confirm how the codes apply to you.
• Deferred salary is risky, because minimum-wage and payment-of-wages rules apply to employees. A lower salary plus a larger ESOP grant, or a contingent offer, is safer.
• ESOPs are only available to employees and directors, not consultants or advisers. Pay consultants in cash, or convert them to employees before granting options (5.01, 5.02).
• Interns and students from IITs and other institutes are a common pre-seed resource. Pay a stipend, sign a short agreement with IP assignment, and check the institute's internship rules.
• Incubator programmes (1.11) sometimes subsidise early hires, or provide shared technicians and lab access.

US#

• Employees or contractors. Misclassification is a real risk. Several states apply strict tests, notably California's ABC test. If someone works your hours, uses your tools and does core work, treat them as an employee.
• Minimum wage and deferral. Deferred salary can't take an employee below the federal or state minimum wage. Exempt-status rules also set salary floors. Founderlevel deferral is common, but deferring an employee's pay needs legal advice.
• Equity: restricted stock with an 83(b) election, or early-exercisable options, when the 409A value is very low. This gives the minus-one hire capital-gains treatment from day one.
• Visas: many strong candidates are on F-1/OPT or H-1B. A pre-funding startup can rarely sponsor an H-1B. STEM OPT and cap-exempt routes through university partnerships are more realistic (1.06, 2.13).

UK#

• Employment rights start on day one (a written statement of terms, the National Minimum Wage, holiday pay). Unfair-dismissal protection has historically needed two years' service, and the Employment Rights Act 2025 changes this. Check the current position.
• IR35: small companies are exempt from the off-payroll rules as clients, so the contractor decides their own status. Misclassification still carries employment-law risk.
• EMI options need the person to be an employee meeting the working-time test (5.04). Consultants get unapproved options or cash.
• Sponsoring a Skilled Worker visa needs a sponsor licence, which takes time and money. Graduate-route and Global Talent holders are easier early hires (1.06).

5. Scripts, mistakes, related playbooks and sources#

Scripts

Making the offer:

"We have money for about 12 months. We're raising a seed round in the next six to nine. We'd like you to build the prototype that round depends on. We can pay $110,000 now and $140,000 once we close, plus 2% of the company. Here's the cap table, here's our runway, and here's what happens to your offer if the round is late."

When they ask what happens if the round fails:

"Then we'd have about four months of runway left, and we'd tell you the day we knew. Your vested equity stays yours, and we'd help you find your next role. I'd rather you join knowing that than find out later."

Asking a former colleague:

"I'm not recruiting you yet, I'm asking for advice. We need someone who can take this device from a lab prototype to something a contract manufacturer can build. Who's the best person you know for that? And would you ever consider it yourself?"

Common mistakes#

1. Hiring too early for work that isn't on the critical path.
2. Paying with promises: deferred pay, or "equity later", with nothing in writing.
3. Treating employees as contractors to avoid paperwork, which creates misclassification and IP-ownership problems.
4. No IP assignment from the first hire. That is a serious diligence red flag (2.01).
5. Offering "co-founder" equity or titles to a minus-one hire without agreeing the tier (5.04).
6. Hiding the runway. Minus-one hires who learn the truth late leave, and take trust with them.
7. Ignoring the hire's own constraints: their visa, or IP clauses with their current employer (1.06, 1.15).

Related playbooks#

• 1.06 Founder visas
• 1.15 Employer IP clauses
• 2.01 Who owns your invention
• 2.13 Students and postdocs as founders
• 5.04 Allocating equity by level
• 5.05 ESOPs for second-line employees
• 6.01 The first 10 hires
• 6.03 The deeptech hiring mix

Sources#

• Startups are waiting longer to make their first hire, Carta
• The state of seed today: 10 learnings from Carta's latest data, SaaStr
• How much equity to give your first employees, SaaStr, citing Carta
• State of Startup Compensation: H1 2026, Carta
• What do founders give the first 5 hires in equity, Carta
• How to hire your first employee at a startup, DEV Community

The worked example is illustrative. Employment law is jurisdiction-specific and changing, especially India's labour codes and the UK Employment Rights Act 2025, so take advice before you make offers. Last checked November 2026.