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How to evaluate startup equity - a practical guide

Sachin AhujaSachin Ahuja
8/24/2025
00

When evaluating startup offers with equity, here's what I look at:

1. Company stage & valuation:

  • Seed: Very risky, potentially huge upside
  • Series A/B: Moderate risk, good upside
  • Series C+: Lower risk, limited upside

2. Your share percentage:

  • Total number of shares matters, not just the number you get
  • Ask for the percentage of fully diluted shares

3. Vesting schedule:

  • Standard is 4 years with 1 year cliff
  • Check for acceleration on acquisition

4. Exercise price and window:

  • Post-termination exercise window (90 days is standard but terrible)

5. Liquidation preferences:

  • Investors get their money back first. Your equity is worth less than you think.

Hope this helps someone make a more informed decision!

equitystartupvaluationguide

Comments (7)

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Lata Mitra
Lata Mitra6 months ago

I didn't realize how important the post-termination exercise window was until I left my last startup and had to come up with cash within 90 days. Make sure to negotiate for at least a 1-year window if you can!

Yash Banerjee
Yash Banerjee6 months ago

For anyone confused about exercise price, remember it's how much you pay to buy the shares. In a high-growth company, getting in early at a low price can be super profitable!

Ritesh Mittal
Ritesh Mittal7 months ago

Seed-stage companies are such a gamble. I've seen some friends hit it big, but it's rare. Personally, I prefer the safer bet of later-stage startups.

Justin Fischer
Justin Fischer11 months ago

It's wild how much variance there is in equity offers. I've had offers with 6-month cliffs and others with no cliff at all. Always read the fine print!

Lakshay Desai
Lakshay Desai8/31/2025

Asking for the percentage of fully diluted shares is a brilliant tip! I never thought to ask for that and just assumed I knew my actual stake.

Omar Moore
Omar Moore8/28/2025

Anyone have tips for negotiating vesting schedules? Especially interested in accelerating vesting on acquisition.

Omar Weber
Omar Weber8/26/2025

Could you elaborate a bit more on liquidation preferences? It seems like a complex topic and I don't fully get how it affects the equity worth.