Evaluate a startup offer in three separate parts: the guaranteed compensation and working conditions, the role and company, and any equity—which may be valuable but is not cash and may never be sellable. Before accepting or negotiating, get the equity plan and grant agreement, understand the exercise cost and deadlines, and compare the offer with your financial needs and other options.
Start with the compensation you can count on
Write down the complete package rather than comparing salary alone. Separate recurring cash from one-time or conditional amounts, and confirm which benefits are actually part of the written offer.
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- Base salary and any guaranteed bonus; distinguish both from discretionary bonuses.
- Health coverage, retirement contributions, paid leave, stipends, and other benefits.
- Work location, schedule, flexibility, and any commuting or relocation costs.
- Any one-time payments and the conditions attached to them.
Compare the guaranteed cash with your budget and alternatives. Treat a promised future raise after a financing round as contingent unless the employer documents a clear commitment and trigger. A startup-offer guide from General Assembly likewise recommends considering benefits, flexibility, leave, and company growth alongside salary.
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Ask what success in the role looks like, how it will be measured, what decisions you can make, and what people or resources will be available. Clarify how the work supports the company’s priorities and what growth or learning the role could offer.
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Assess the company’s product, customers, competitive position, leadership, funding situation, and ability to sustain the business. “Fast-growing” is a claim to examine: ask what metric is growing, over what period, and how the company defines it. A company can grow quickly and still fail; neither a growth claim nor a large valuation establishes that your equity will produce proceeds.
Find out what the equity actually is
Ask for the award type and governing documents before assigning the equity a value. The SEC’s overview of common startup securities distinguishes these instruments:
- Stock options: a right, not an obligation, to buy a specified number of shares at a set strike price after vesting. As the SEC explains, “A stock option provides the holder with the right—but not the obligation—to ‘exercise’ their option to purchase a certain number of shares of company stock at an agreed-upon price (a strike price) after a vesting period.”
- Restricted stock units (RSUs): a right to receive shares once the applicable vesting or other conditions are met.
- Restricted stock awards (RSAs): shares owned from the grant date, subject to conditions.
These are not interchangeable: ask which instrument the offer includes and what conditions apply. For options, request the plan and your grant agreement, then check:
- The number of options and the fully diluted share count used for any quoted ownership percentage.
- The strike price, how it will be set, and the resulting cost to exercise.
- When vesting begins, whether there is a cliff, how often vesting occurs, and whether performance conditions apply.
- The expiration date, post-termination exercise period, and treatment of unvested options when employment ends.
- Whether early exercise is available and, where applicable, whether the award is an incentive stock option or nonstatutory option.
- Any plan or grant terms, preferred-stock rights, or capital-structure information that could affect what common shareholders receive.
A quoted ownership percentage is only as useful as its denominator and assumptions. Ask how it was calculated and whether it refers to fully diluted shares; do not infer a percentage from an option count alone.
Do not treat private-company equity as cash
Private-company shares generally do not trade on a public exchange. You may not be able to sell them until a liquidity event such as an IPO, tender offer, or merger or acquisition—and a sale may never happen. Carta’s guide to private-company equity also identifies company failure as a real risk.
A headline valuation or grant value does not tell you what you can realize. In particular, multiplying your share count by a recent preferred-share price ignores the possibility that the price is not available to common shares, future dilution, the time until a sale, and the terms of a liquidity event. If you compare possible outcomes, label the assumptions—future financing and dilution, exit value and timing, exercise cost, taxes, and relevant share rights. Those scenarios are illustrations, not predictions; the sources do not establish a probability of success or a likely payout for an unspecified company.
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Understand vesting and what happens if you leave
Vesting determines when you earn the right to exercise options; unvested options are generally not yet exercisable. Some schedules include an initial cliff, followed by regular vesting increments. If you leave, the treatment of vested and unvested awards depends on the plan and grant agreement, so read those terms rather than relying on a customary schedule.
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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsFor vested options, the post-termination exercise window matters: missing the deadline can mean losing the ability to exercise them. Carta’s September 1, 2026 guide to exercising stock options says many companies allow 90 days after employment ends, while some allow longer; your agreement controls. The same guide reports that 28% of options that do not qualify for early exercise are exercised during the post-termination exercise period, attributing the figure to Carta’s stock-options report. That is a Carta-reported statistic, not a universal benchmark or a prediction about your award.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Calculate exercise and tax exposure before relying on an option grant
For options, calculate the strike-price cost as the number of options you plan to exercise multiplied by the strike price. Add any taxes or fees that may apply, and consider that the cash can be tied up in shares you cannot sell. Ask the company for the information needed to make this estimate; a grant’s notional value does not pay these costs.
U.S. federal tax treatment depends on the award and the circumstances. The IRS’s stock-options guidance says statutory options generally do not create gross income at grant or exercise, though exercising an incentive stock option may trigger alternative minimum tax. For many nonstatutory options without a readily determinable fair market value, the difference between the stock’s fair market value at exercise and the amount paid is included in income at exercise. Selling shares has separate tax consequences. These rules are U.S. federal guidance, not individualized tax advice; timing, location, award terms, and personal circumstances can change the outcome. Consider consulting a tax professional before exercising.
Compare offers on the same basis
If you have more than one real option, put the same categories side by side. Keep uncertain private equity separate from guaranteed annual pay, then weight the categories according to your cash needs, risk tolerance, and career goals.
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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →| Comparison area | What to compare |
|---|---|
| Cash | Guaranteed annual salary, guaranteed bonus, discretionary bonus, and one-time payments with their conditions. |
| Benefits and work terms | Health coverage, retirement contributions, leave, stipends, location, schedule, and flexibility. |
| Role and career | Scope, manager, decision rights, resources, learning, career path, and opportunity to do meaningful work. |
| Company prospects | Product and customer evidence, competitive position, leadership, financial durability, funding, and the role’s importance to execution. |
| Equity terms | Instrument, share-count context, vesting, strike price, exercise window, expiration, and treatment when employment ends. |
| Liquidity and downside | Possible routes to liquidity, dilution, risk of loss, and your ability to fund exercise and taxes. |
Questions to resolve before you decide
- Can I review the offer letter, equity plan, and grant agreement before accepting?
- What exactly is the equity instrument, and how was any quoted ownership percentage calculated?
- For options, what are the strike price, vesting schedule, expiration date, and post-termination exercise deadline?
- What cash might exercising require, and what tax questions should I take to a qualified adviser?
- What evidence supports the company’s growth claims, and what would success in my role look like?
- Which parts of the package are guaranteed in writing, and which depend on future events or discretion?
No company, offer letter, equity plan, capitalization table, financing terms, jurisdiction beyond the U.S. federal tax discussion, or personal financial details are specified here. Without those, it is not possible to value a particular grant, judge an individual startup’s health, predict liquidity, or calculate your taxes. Use the employer’s governing documents and an appropriate legal or tax adviser for company- and person-specific decisions.
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