How do you compare equity vs salary in startup job offers?
Comparing equity vs salary requires calculating the break-even exit multiple — the point where equity value makes up for the salary difference. The formula:
Break-Even Multiple = Salary Difference / ((Equity B - Equity A) × Company Value)
Where Salary Difference is the total extra cash from the higher-salary offer over your expected tenure, Equity B - Equity A is the additional equity percentage in the higher-equity offer, and Company Value is the current valuation.
Worked Example: Comparing Two Offers
Offer A: $180K salary, 0.1% equity, $1 strike price
Offer B: $150K salary, 0.5% equity, $1 strike price
Company: $50M valuation, you plan to stay 4 years
Salary difference (A - B) = ($180K - $150K) × 4 = $120,000
Equity difference (B - A) = 0.5% - 0.1% = 0.4%
Break-even multiple = $120K / (0.004 × $50M) = $120K / $200K = 0.6x
At any exit above 0.6x, Offer B's equity value exceeds Offer A's salary advantage. At a 5x exit ($250M), Offer B's equity is worth 0.5% × $250M = $1.25M vs Offer A's 0.1% × $250M = $250K — a $1M difference that far outweighs the $120K salary sacrifice.
Use the calculator above to model your specific offers and see when equity makes up for the salary difference.