Comparing Equity vs. Salary in a Startup

Joining a startup can be a risky career move. You may be compensated for your efforts in the form of equity rather than a monthly salary. The average person would consider this too big a drawback to even think about working at a startup. But is it really that bad an option? A clearer picture will emerge when you compare equity and salary at a startup.

Why Startups Offer Equity


It is quite obvious that startups cannot afford to pay huge salaries to qualified professionals in a bid to lure them to work here. However, the experience and expertise they bring to the table is too important to let go off. So, in order to compensate them for the efforts that they are putting in, they are offered stocks in the company. This is not a win-win situation for you. You never know how the stock of the company will perform, hence there is a chance you don’t make any money.

Equity vs. Salary


While working for a startup, it is reasonable to assume that the company will go through some drastic changes. Salaried employees are not affected by any changes to the structure or scope of the startup. Regardless of the fact that the company is doing well or not, you will be paid your salary that was agreed upon initially.

Since it’s a matter of company stock, you cannot actually take such a risk. Even though you may be an employee, you are a shareholder at the same time. These stocks may not have any value whatsoever. But with the growth of the business, you can expect the stocks to perform well and their prices will go up.  Moreover, once the business starts doing well, you will make a decent sum of money through your equity. The benefits don’t end just yet. Since your performance affects the bottom-line of the startup, you will play an active role in its growth and success.

Gauging the Success of the Business


If you do consider working in a startup, you will have to assess whether it has the credibility that is required for growth and prosperity. These two factors are directly proportional to the resulting value of the equity being offered to you. Therefore, it becomes even more important for you to gauge whether the business has the potential to be successful in the years to come.

Making this assessment is not as difficult as it may seem. You simply have to carry out a risk assessment of the company. Assessment methods like the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis can give you a better picture of what you can expect from the company.

It all comes down to the option you are more comfortable with. There is no doubt that receiving a monthly salary gives you a sense of comfort and a degree of financial stability. On the other hand, receiving equity could lead to huge gains if the company takes off in the near future. So, there are benefits of both. The bottom-line is that you should not turn down the option of working in a startup just because you are offered equity instead of a salary.

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Reasons to Work at a Startup

When looking for a job, you might be tempted to apply at established companies only. Some people even turn down job opportunities at startups simply because the company is new and yet to gain a foothold in the industry. This is where they miss out on the numerous benefits of working in a startup. Here are some reasons why you should consider working for a startup:



Working at a startup offers you a flexible environment. You are not restricted by the usual policies that are implemented in larger organizations. It means that you can accomplish a task as you see fit. As long as the desired results are being delivered, the management will not object with the way you work in the organization. This flexibility can be motivating for almost any individual, you will not be constantly harassed by the higher management but you will be held accountable for the job assigned to you.

Opportunities for Growth

Startups Career Growth

Since startups are small-scale businesses, it offers you a unique opportunity to grow with the business. Not only will you be able to benefit from the experience but you will grow professionally as well. As the business expands, you will be the primary candidate for new openings within the organization. This can help you grow professionally and offers various perks as a result. It goes to show that you can carve out a position which can amplify over time.

Greater Responsibilities


In such organizations, the management requires its employees to be responsible and be able to adapt to new scenarios on a regular basis. You will not be restricted to a certain task but will be given more responsibilities if you prove worthy. They will push you towards versatility and growth thus increasing your productivity. This leads to better prospects in the future as you will know how to deal with stressful situations and also be able to find solutions for your problems.


Above view of consultant shaking hands with her client

Once you have become a part of the organization, your work and effort will be evaluated at every turn. Your hard work and efforts will not be in vain, you will immediately be recognized for your achievements. You will be praised for your dedication towards the company which will lead to better prospects in the process. In startups, the management is constantly monitoring its employees to ensure that they are taken care of and appreciated at the same time.

Positive Energy


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Since startups are new and fresh, the vibe is generally energetic. The individuals who are already onboard are full of enthusiasm. This can prove to be a motivational factor as the mood is distinctly positive, making the environment a fun place to work in.

Keeping these factors in mind, you will come to realize that the benefits of working in a startup outweigh the negatives. The pay may be lower but you will get more opportunities to grow and learn. If you are looking for a job, you should look for such opportunities to broaden your horizon rather than restricting yourself to finding jobs in a large company.

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