Why Most People Compare Offers Wrong

When startup employees compare job offers, they usually make one of two mistakes:

1. They only compare salary. "Offer A pays $140K, Offer B pays $120K — obviously A is better." Not necessarily. If Offer B includes 0.5% equity in a company that 10xes, that equity alone could be worth $500K+.
2. They compare option counts. "Offer A has 20,000 options and Offer B has 10,000." Raw option counts are meaningless without knowing the strike price, total shares outstanding, and company valuation.

The right approach is to compare total 4-year compensation — salary plus equity value — across multiple exit scenarios. That's the only way to make an informed decision.

The 7 Factors That Actually Matter

When you compare two startup equity offers, you need to look at all seven of these variables:

1. Base Salary

Startups typically pay 70-90% of market rate. A $140K offer at a startup might correspond to $160-180K at a big tech company. Don't just compare startup vs startup — compare against your opportunity cost.

2. Number of Options

The raw number of stock options granted. This number is meaningless on its own — it's only useful when combined with total shares outstanding.

3. Strike Price (Exercise Price)

What you'll pay per share when you exercise. Your options only have value if the company's share price exceeds this number. A $0.50 strike price vs a $5.00 strike price makes a huge difference.

4. Current FMV (409A Valuation)

The current fair market value per share. The difference between FMV and your strike price is your "spread" — the intrinsic value of each option right now.

5. Vesting Schedule

Almost all startup equity vests over 4 years with a 1-year cliff. But some offers have different terms — 3-year vesting, 6-month cliff, or even immediate vesting for senior hires. Shorter vesting = better for you.

6. Company Valuation

The company's most recent valuation (or post-money valuation from last funding round). This determines the current share price and is the baseline for calculating potential returns.

7. Shares Outstanding

Total number of shares the company has issued. This lets you calculate your ownership percentage:

Real Example: Offer A vs Offer B

At first glance, Offer A looks better — $20K more salary and the company is 10x more valuable. But let's do the math.

Calculating 4-Year Total Compensation

To make a fair comparison, calculate total comp over the full vesting period:

Offer A — Series A Fintech

• 4-year salary: $150K × 4 = $600,000
• Current equity value: ($5.00 - $2.00) × 20,000 = $60,000
• Exercise cost: $2.00 × 20,000 = $40,000
• Net equity value: $60,000 - $40,000 = $20,000
• 4-year total (current): $600,000 + $20,000 = $620,000

Offer B — Seed Stage AI

• 4-year salary: $130K × 4 = $520,000
• Current equity value: ($1.00 - $0.50) × 50,000 = $25,000
• Exercise cost: $0.50 × 50,000 = $25,000
• Net equity value: $25,000 - $25,000 = $0
• 4-year total (current): $520,000 + $0 = $520,000

Based on current value alone, Offer A wins by $100K. But current value tells you almost nothing about what the equity will actually be worth.

Exit Scenarios Change Everything

The real comparison happens when you model different exit scenarios. Startups are high-risk, high-reward — your equity is a bet on the company's future valuation.

At a 3x exit, Offer B already pulls ahead. At 10x, it's worth more than double. Why? Because Offer B gives you 10x more ownership (0.50% vs 0.05%). Earlier-stage companies offer more equity precisely because the risk is higher.

Red Flags to Watch For

When comparing offers, watch for these warning signs:

• They won't share shares outstanding. If a company won't tell you total shares, you can't calculate your ownership %. This is a red flag — walk away.
• They won't share the 409A / FMV. Without the current FMV, you can't calculate what your options are worth today.
• Revesting requirements. Some companies require you to "re-vest" previously earned equity when you get promoted. This effectively resets your clock.
• No 409A valuation. Early-stage startups sometimes don't have a 409A yet. The strike price may change, potentially against you.
• Aggressive cliff periods. A 2-year cliff means you get nothing if you leave before month 24. Standard is 1 year — anything longer is unusual.
• Post-termination exercise windows shorter than 90 days. Standard is 90 days after leaving to exercise vested options. Some companies now offer longer windows, which is better for you.

Free Equity Offer Comparison Tool

Want to skip the manual math? Our free Compare Equity Offers tool lets you input two offers side by side and instantly see:

• 4-year total compensation comparison
• Equity value at current valuation
• Ownership percentage comparison
• Exit scenario table at 1x through 50x
• Visual bar chart comparing both offers
• A clear verdict: which offer wins at each exit multiple

The Decision Framework

Here's the framework for choosing between offers:

1. Calculate 4-year total comp at current valuation. This is your downside scenario. If the company doesn't grow, what do you walk away with?
2. Calculate 4-year total comp at 5x exit. This is a moderate success scenario. At this point, which offer looks better?
3. Calculate 4-year total comp at 10x exit. This is the "good outcome" scenario — the company does well but isn't a unicorn.
4. Assess the probability. Be honest: which company is more likely to 5x? A Series A company with revenue and traction, or a pre-seed company with a great pitch?
5. Factor in non-financial considerations. Team quality, role scope, learning potential, commute/remote, and culture all matter.
6. Decide based on your risk tolerance. If you need certainty, lean toward higher salary + later-stage company. If you can afford risk, earlier-stage + more equity often wins.

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