Startup Equity vs Big Tech Base Salary: A Framework for Actually Comparing Them

An offer letter with a $140,000 base and $60,000/year of vesting equity is not simply a $200,000 offer. Equity carries risk, illiquidity, and dilution that cash doesn't, and treating the two as interchangeable is one of the most common mistakes developers make when comparing offers.

Start by asking what the equity actually is

Stock options in a private company, restricted stock units (RSUs) in a public company, and RSUs in a pre-IPO company are three very different instruments:

• Public company RSUs are close to cash — you can typically sell them shortly after vesting. Treat this as close to real compensation.
• Pre-IPO RSUs or options are a bet on a future liquidity event (IPO or acquisition) that may never happen, or may happen years later than expected. Their value on paper and their value in your bank account can differ enormously.
• Options specifically also require you to pay a strike price to exercise them, and can trigger a tax bill before you've sold anything — a detail that catches a lot of people off guard when they leave a company.

A rough discounting approach

One reasonable way to compare offers: take the stated equity value and apply a heavy discount based on stage and liquidity. Public company RSUs might get discounted 10–20% for volatility. Late-stage pre-IPO equity might reasonably be discounted 50% or more. Early-stage startup equity is closer to a lottery ticket — worth factoring in as upside, not as compensation you can count on.

This isn't about being pessimistic; it's about not letting a large headline equity number quietly justify accepting a base salary that wouldn't otherwise be competitive.

Questions worth asking before you accept

• What's the current 409A valuation (for private companies), and how has it moved over the last two rounds?
• What's the vesting schedule, and what happens to unvested equity if you leave or the company is acquired?
• Is there a post-termination exercise window that isn't the standard 90 days? A short window can force you to either pay a large exercise cost quickly or forfeit the equity.
• How much runway does the company have, and when did they last raise?

The bottom line

Equity can be genuinely valuable, sometimes life-changingly so — but it's a different asset class from salary, with different risk. The healthiest way to compare two offers is to price equity closer to its realistic, discounted value rather than its optimistic headline number, and make sure the base salary alone would still be acceptable to you even if the equity ends up worth nothing.