Startups in Asia-Pacific and the Middle East (APAC and ME) are shifting away from the aggressive expansion strategies of the past. New data from private companies on the Carta fund administration platform shows a more cautious approach to hiring and equity distribution, marking a new phase in the region’s startup evolution.
Hiring slows, departures rise
Between 2019 and 2022, startup hiring across APAC and ME surged, with new hires growing by 423 per cent—far outpacing the 115 per cent increase in departures. However, this trend has now reversed.
In 2024, hiring activity remained 131 per cent above 2019 levels, but departures (including resignations and layoffs) rose by over 400 per cent. The ratio of hires to departures dropped to 2:1, down from 10:1 in 2021–2022—reflecting a significant contraction in workforce expansion.
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This trend mirrors global patterns as companies respond to economic uncertainty and recalibrated investor expectations. For the third year in a row, departures have increased, a sign that the post-2022 market correction continues to affect headcount decisions.
Bigger teams than the US—at every stage
Despite the slowdown, startups in APAC and ME tend to run larger teams than their US counterparts. A Series B company in the region has a median headcount of 53, nearly double that of the US.
At earlier stages, APAC and ME startups still staff more heavily:
- Pre-seed: 4 employees
- Seed: 8 employees
- Series C+: 81 employees
This may suggest greater conservatism among US startups or better integration of automation and AI tools that support scaling with leaner teams.
Industry matters: SaaS leads, biotech lags
Hiring patterns differ significantly across industries. SaaS companies, for example, employ a median of 11 staff at pre-seed or seed—more than five times that of biotech and pharma startups. These variations reflect the shorter R&D cycles in software compared to capital-heavy sectors like life sciences.
Equity grants shrink across the board
Since 2021, the median initial equity grant size in APAC and ME has dropped by over 30 per cent, echoing a similar trend in the US. The market appears to have settled into a new normal after years of inflated valuations and compensation packages.
Early hires still receive a premium:
- First three hires: 0.18–0.39 per cent of fully diluted equity
- Hires #4–10: 0.05–0.10 per cent
While the tiered structure remains consistent with the US, APAC and ME startups generally grant less equity per hire—about half as much compared to US firms.
Equity more evenly distributed across roles
Entry- and mid-level employees across most functions typically receive 0.01–0.02 per cent of total equity. The median grant in engineering, marketing, and customer success is about 0.017 per cent.
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At the higher end (75th percentile), engineering roles still command larger equity packages, but the gap is narrower than in the US. In fact, APAC and ME startups distribute equity more evenly across job functions, while US startups tend to heavily favor engineering and product roles.
Advisors and Board members still receive generous grants
Advisor equity starts high and decreases as startups mature:
- Pre-seed advisor: 0.624 per cent median grant
- Later-stage advisor: 0.041 per cent
- Board members typically receive around 0.46 per cent equity—less than early advisors but more than those who join later.
ESOPs stabilise after seed stage
Employee Stock Option Pools (ESOPs) in APAC and ME increase sharply from 7.3 per cent at pre-seed to 11.2 per cent at seed but then plateau between 11–13 per cent through Series C+.
In contrast, US startups continue expanding ESOPs at later stages, reaching around 17.6 per cent at Series C+. This suggests APAC and ME companies may be relying less on equity-based incentives as they scale.
ESOP size varies by industry and geography
Sectoral differences are stark:
- Adtech/edutech: ~12 per cent ESOPs
- Healthtech: <7 per cent
Regionally, Australia and New Zealand (ANZ) startups allocate more to ESOPs than those in East and Southeast Asia (ESEA) or Middle East and South Asia (MESA). Possible drivers include:
- Stronger tech talent competition in ANZ
- Tax benefits for ESOPs in Australia
Vesting terms: Standardised yet evolving
Most startups in APAC and ME follow global standards:
- 4-year vesting
- 1-year cliff, then monthly vesting
From 2020–2024, over 80 per cent of equity grants on Carta included a cliff. Yet around 20 per cent had no cliff, hinting at growing flexibility to boost retention or adapt to employee expectations.
Monthly vesting remains the dominant structure, used in 55 per cent of grants.
Option exercise rates decline sharply
Although equity remains a core compensation tool, option exercise rates have dropped since 2021—even when the strike price is lower than fair market value (FMV).
Only 28 per cent of eligible options were exercised in 2024, down from 60 per cent in 2021. This decline suggests reduced confidence in equity as a wealth-building tool or rising caution among employees amid uncertain exit outcomes.
Regional differences in exercise behaviour
Option exercise rates vary widely across subregions:
- MESA: 14.5 per cent
- ESEA: 22.8 per cent
- ANZ: 51.8 per cent
ANZ employees outpace even the 32.2 per cent US average, showing that local tax regimes, personal finance norms, and startup liquidity events may influence exercise decisions.
Lower dilution in APAC and ME
At Series A, founders in APAC and ME give up 18.2 per cent of equity on average, compared to 20.8 per cent in the US. This allows local founders to retain greater control moving into Series B.
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At later stages, US startups show greater variability in dilution, while APAC and ME companies tend to follow more standardised deal structures—suggesting more predictable fundraising norms across the region.
A more disciplined era
The data reflects a more disciplined, risk-aware startup culture emerging in APAC and ME. Companies are prioritising leaner teams, recalibrating compensation, and standardising equity practices in response to global headwinds and regional realities.
As the ecosystem matures, founders and employees alike are adapting to a post-growth-at-all-costs world—one where equity is still central but wielded with greater precision.
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