Equity for Grants Model
A business strategy where the government provides capital to private companies in the form of equity stakes rather than outright grants, ensuring taxpayers participate in the upside. The US-Intel deal is a prime example.
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8/31/2025, 4:31:58 AM
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8/31/2025, 5:04:34 AM
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8/31/2025, 4:38:59 AM
Summary
The Equity for Grants Model represents a novel industrial strategy where the US government takes an equity stake in companies, such as Intel under the CHIPS Act, instead of providing traditional grants. This approach, influenced by figures like Howard Lutnik, is primarily driven by national security concerns to counter state-backed industries in countries like China and reduce reliance on foreign manufacturers like TSMC. The model has sparked discussions about establishing a US Sovereign Wealth Fund, with potential returns proposed to address the Social Security crisis by funding the OASI, a measure that would require Congressional approval. This model is seen as a strategic shift in government funding, moving towards a more direct ownership stake to align national interests with corporate success.
Referenced in 1 Document
Research Data
Extracted Attributes
Type
Business Strategy and Model
Mechanism
Government takes equity stake instead of providing grants
Primary Purpose
National Security, industrial competition, reducing foreign reliance
Proposed Application of Returns
Fund OASI to address Social Security crisis
Requirement for Full Implementation
Congressional approval for US Sovereign Wealth Fund
Timeline
- The US Government, with input from Howard Lutnik, takes an equity stake in Intel instead of providing grants under the CHIPS Act, exemplifying the Equity for Grants Model. (Source: document_02c82d46-f2b6-49b1-b090-1968e061ef9c)
2024-04-10
- Discussion on the All-In Podcast highlights the Equity for Grants Model as a strategic necessity for national security and proposes the creation of a US Sovereign Wealth Fund with returns directed to the OASI. (Source: document_02c82d46-f2b6-49b1-b090-1968e061ef9c)
2024-04-10
Web Search Results
- The use of equity grants to manage optimal ...
The foregoing arguments suggest a model for grants of equity incentives that includes the incentive residual calculated using Eq. (1) and control variables for firms’ use of stock compensation in lieu of cash compensation. We measure grant size as the logarithm of the equity incentives provided by the grant plus one.7 Our model for new grants of equity incentives to the CEO is(2)log(New incentive grant+1)it=β 0+β 1 Incentive residual it−1+β 2 log(Sales)it−1+β 3 Book-to-market it−1+β 4 Net [...] predict that these residuals are negatively related to new grants of equity incentives to CEOs in the following year. In Section 2.3 we define a model for grants of equity incentives that provides the basis for our joint hypothesis test. [...] The remainder of this paper is organized as follows. In Section 2, we define our measure of equity incentives, develop a model for the optimal level of incentives, and predict that deviations from this level will affect grants of equity incentives. We describe the data in Section 3, and present the results of our tests in Section 4. We provide sensitivity tests of our results in Section 5. In Section 6, we provide a summary and concluding remarks.
- Annual Equity Grant
An equity grant is a form of non-cash compensation that gives an individual—typically an employee or executive—the right to own a portion of a company. In most cases, this is part of an employee’s total compensation package and serves as both a reward and an incentive. Equity grants can take various forms, including stock options, restricted stock units (RSUs), or phantom stock. [...] For early-stage startups or fast-growing scaleups, equity grants are a popular method to attract and retain top talent when cash resources are limited. Rather than offering a high salary upfront, companies offer employees the potential for shared success if the business grows and performs well. Why Companies Offer Equity Grants [...] Conclusion An equity grant is more than just a benefit—it’s a partnership. Whether you’re a founder trying to attract talent without draining your cash reserves or an employee offered equity in a startup, understanding how equity grants work is crucial. These grants can offer substantial rewards, but they also come with legal, financial, and strategic considerations.
- Understanding Equity Grants and How it Works in Startups
.png) # Understanding equity grants and how it works in startups Equity grant Equity grants are a way for companies to give a slice of the cake (a percentage of the company's total equity) to their employees, offering them ownership stakes in the business. [...] Whether you're a new startup founder looking to create or expand your equity incentive plans, or an employee who was just offered an equity grant, this article tackles employee equity grants and what it means for you: ##### Equity grants, explained ## What is an equity grant An equity grant is a non-cash compensation given to someone, giving them a percentage of ownership to a company. This may come in various forms, such as stock options, restricted stocks, or stock appreciation rights. [...] An equity grant agreement is a legal document that breaks down the details of the equity such as the type of equity on offer, how many the person will be offered, the total value of the equity, any vesting periods or performance milestones attached to the offer, the fair market value of each equity unit, and other important legal information. ## How does an equity grant work for employees
- Equity Grant Guide: Types, Taxes, Risks & Negotiation
Hence, this guide will help you make informed decisions about your equity grant options and maximize their potential benefits. Understanding Equity Grants in Compensation Packages Equity grants are a form of compensation that gives employees the right to own a portion of the company’s stock. This type of incentive serves multiple purposes: [...] This setup offers potential upside as the company grows, making it an attractive proposition for those willing to take on the risk. The vesting period usually spans 4 to 5 years, and equity grants are awarded as a percentage of company ownership, which can be a golden parachute for early employees if the company succeeds. Growth and Series B/C Phases As companies mature, equity grants become more structured. Companies might adjust their equity strategies by incorporating the following: [...] > Equity Grant Guide: Types, Taxes, Risks & Negotiation Startup Equity & Ownership Equity grants are a powerful tool in compensation packages, offering employees a stake in the company’s success. As per Chris Dohrman of J.P. Morgan: “Equity compensation allows employers to offer their employees more – which is great for the employees – while controlling the overall impact on the bottom line, cost efficiently, and usually with tax advantages.”
- How to structure startup equity for early hires
To establish a starting point for equity grants, we recommend using 0.75% as the “baseline grant” for your first hire. This percentage represents the equity grant for a technical, mid-level employee and serves as a reference point for your future calculations. A .75% equity grant for a mid-level technical hire is consistent with market trends, based on real offers from our founders and further validated by commonly used benchmarking data. [...] For growing companies, the primary constraints on equity grants are the size of the options pool set aside for employees and the number of hires a company plans to make. For example, if Company A plans to hire 10 employees and Company B plans to hire 20, but both have the same size options pool, Company B will have less equity to allocate per employee.