A startup offer typically trades base salary for equity, which is conditional on a share price, on an exit that may never happen, and on staying long enough to vest. An established employer's offer is more of it certain. Compare the certain parts directly, then decide separately how much you are willing to pay for the option — treating the equity's paper value as equivalent to cash is where these comparisons go wrong.
Compare the certain parts first
Base, bonus actually paid, retirement match, insurance contribution, leave. Do that comparison on its own and you usually find the established offer ahead by a clear margin.
That margin is the price of the option. Whether it is worth paying is a separate question and a legitimate one.
What private equity is actually worth
Unknown, and the honest answer stops there. A strike price and a preferred-round valuation give you a paper number that is not a market price, because there is no market. The distribution of outcomes is wide, heavily weighted to zero, and the tail is what makes it worth anything at all.
Anyone presenting a private grant as a definite dollar figure is describing one point on a very skewed distribution.
The questions that narrow it
How many shares, and out of how many outstanding on a fully diluted basis — a number of shares alone is meaningless. What was the last round’s price and when. What is the liquidation preference stack, because a large one can consume an exit before common shares see anything. And what is the exercise window if you leave, since ninety days is common and can make vested options unaffordable to keep.
Employers that expect these questions answer them. Ones that treat them as impertinent are telling you something.
The risks that are not the equity
Runway. A shorter one raises the probability of the job ending regardless of anything you do, and it is a factual question with an answer. Notice and severance are typically thinner. And the role itself is more likely to change substantially, which cuts both ways.
When the startup offer is the right one
When you can afford the lower certain pay without strain, when the work or the learning is genuinely better, and when you would take the job at zero equity value. That last test is the useful one: if the answer is no, you are buying a lottery ticket with a pay cut, and it is better to know that before rather than after.
Common questions
How do I value startup equity?
Honestly, you cannot value private equity u2014 there is no market price. Establish the fully diluted share count, the last round price, the preference stack and the exercise window, then treat it as an option rather than cash.
Why is a share count alone meaningless?
Because it tells you nothing without the fully diluted total. Ten thousand shares is a very different thing out of one million than out of one hundred million.
What is a liquidation preference stack?
The claims investors have ahead of common shareholders at an exit. A large stack can consume the proceeds before employee shares receive anything.
What is the exercise window?
How long after leaving you have to buy your vested options. Ninety days is common and can make them unaffordable, effectively forfeiting what you vested.
What is the useful test?
Whether you would take the job at zero equity value. If not, you are accepting a pay cut for a lottery ticket, which is a decision worth making deliberately.