Description:
How do I weigh the benefits against the potential downsides? Would it make sense only for certain types of companies or roles?
3 Answers
Requesting equity shares can be a smart move, but it depends on your risk tolerance and career goals. Equity often comes with vesting schedules, meaning you need to stay with the company for several years before fully owning those shares. This can limit flexibility if you want to change jobs quickly. Also, not all equity is created equalβstock options might require you to pay upfront exercise costs, which could add financial strain.
Equity makes more sense in startups or fast-growing companies where there's potential for big upside. In established firms offering restricted stock units (RSUs), the value tends to be more stable but less explosive. Consider how much control and influence you'll have too; senior roles may gain more from equity than entry-level positions because they impact company direction more directly.
- Anonymous: Thanks for the breakdown! How can I best evaluate the true potential value of equity in a startup?Report
When I joined a startup as a software engineer, I was offered equity shares along with my salary. I researched the company's financial health and growth potential before accepting. Over three years, the company grew 10x in valuation, turning my equity into a significant bonus beyond my salary. However, during that time, the shares were illiquid and tied to company performanceβif the startup had failed or stagnated, those shares would have been worthless. This experience taught me that equity is more beneficial in high-growth companies where you believe in long-term success but less so in stable or declining firms. The key takeaway is to assess your risk tolerance and trust in the companyβs future before requesting equity.
Only request equity if you understand dilution and exit scenarios clearly
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