Startup Hiring: Equity vs Salary — What Developers Should Know

Equity compensation is one of the most confusing aspects of startup job offers. Unlike salary, which is straightforward cash, equity is a bet on the company's future value. Understanding how equity works is essential for making informed decisions about startup opportunities.

Understanding equity basics

Equity typically comes as stock options (the right to buy shares at a fixed price) or RSUs (actual shares granted over time). Key terms to understand: strike price (what you pay per share), vesting schedule (when you own the shares), cliff period (time before any vesting starts), and liquidity preference (who gets paid first if the company is acquired).

How to evaluate a startup offer

Never value equity at face value — most startups fail and equity becomes worthless. Treat equity as a potential upside, not guaranteed compensation. Make sure the base salary covers your needs. Ask about the company's valuation, recent funding rounds, and liquidation preferences. A good offer should be compelling even if the equity goes to zero.