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Compensation

Startup ESOPs are mostly worthless - change my mind

Lakshay DesaiLakshay Desai
11 months ago
80

Every startup offers ESOPs as a significant part of comp. But let's be honest:

  1. Most startups never IPO or get acquired
  2. Even if they do, dilution can make your shares worth way less
  3. You often can't sell them for years
  4. Tax implications are confusing and often unfavorable

I'd rather have a lower total CTC with higher cash component than impressive-looking ESOPs that might never materialize.

Am I wrong? Has anyone actually made significant money from startup ESOPs in India?

esopsstartupcompensationdebate

Comments (3)

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Lakshay Desai
Lakshay Desai10 months ago

Has anyone tried negotiating for better terms on ESOPs? I feel like we don't discuss this enough. Maybe getting a clearer vesting schedule or liquidity preference could help?

Jun Liu
Jun Liu11 months ago

I hear ya, Lakshay! Startup ESOPs are tricky. I was part of a startup that got acquired but my shares were diluted to almost nothing. It was a bummer. Cash feels like a safer bet, especially if you're managing monthly expenses.

Kevin Jung
Kevin Jung11 months ago

I get your point, but I've seen some people make a fortune from their ESOPs when the company did well. It's rare, but not impossible. Also, if you believe in the startup's mission and growth, ESOPs can be motivating.