Money moments
Is my startup equity offer any good?
The short answer: a startup equity offer is only meaningful once you know three numbers — your percentage of the fully diluted company, the strike price versus the latest preferred price, and the vesting schedule. Everything else is a story.
What should I ask before signing?
Ask the company for these, in writing. Good companies answer them without friction:
- Fully diluted share count — so you can compute your actual ownership percentage.
- Latest 409A valuation and preferred price — the gap between your strike price and what investors paid tells you what the paper upside really is.
- Type of grant — ISOs, NSOs, and RSUs are taxed very differently.
- Post-termination exercise window — 90 days is standard and punishing; longer is a real benefit.
- Liquidation preferences — how much money investors get back before common shareholders (you) see anything.
How do I put a dollar value on the offer?
A rough, honest method: your percentage × a plausible exit value × a haircut for dilution (often ~50% over several rounds) × the probability the company exits at that value at all. That last factor is the one recruiters never mention — most venture-backed startups return little or nothing to common stock.
This isn’t pessimism, it’s pricing. Upside is real; certainty is not.
When does exercising early make sense?
Early exercise (if the plan allows it) can start your capital-gains clock and enable an 83(b) election, which can dramatically reduce taxes if the company succeeds. It also means paying real cash today for shares that may end up worthless. The decision depends on the strike price, your tax bracket, and money you can genuinely afford to lose — a moment worth getting personal advice on.
The moment this page is for
You have an offer letter open in another tab, the recruiter wants an answer by Friday, and the equity number is doing a lot of emotional work. Before you decide, ask the question out loud — the specifics of your situation change the answer.
Quick answers
What percentage of a startup do my options represent?
Divide your option grant by the company's fully diluted share count — the total including all issued shares, all options, and the unallocated option pool. The share count alone tells you nothing; 100,000 options could be 1% of a company or 0.01%. The company should give you the fully diluted number when you ask.
What is dilution and how much should I expect?
Each new funding round issues new shares, which shrinks your percentage. A typical venture round dilutes existing holders by roughly 15–25%. If a startup raises two or three more rounds before an exit, your original percentage could reasonably be cut in half.
Should I take more salary or more equity?
Equity in a private startup is high-risk and illiquid — you usually can't sell it until an acquisition or IPO, and most startups return nothing to common shareholders. A useful discipline: value the equity at zero for budgeting purposes, then decide if the salary alone works for your life. Take the equity for its upside, not as a substitute for money you need.
What happens to my options if I leave the company?
Most plans give you 90 days after leaving to exercise vested options or lose them. Exercising costs real money (strike price plus potential taxes) for shares you may never be able to sell. Some companies now offer extended exercise windows — it's worth asking before you sign, not when you resign.
Educational only — not financial, legal, tax, or investment advice. Rules and thresholds change; the specifics of your situation matter more than any general guide.