Your Startup Equity Is Worth Less Than They Told You

📰 Medium · Startup

Understand the true value of your startup equity by considering factors like vesting, valuation, and potential payout, and don't rely solely on the 'on paper' value presented to you.

intermediate Published 22 Apr 2026

Action Steps

Calculate your equity stake using the fully diluted capitalization of the company
Research the company's valuation and consider the potential for down rounds
Consider the vesting schedule and cliff period to determine when you can actually access your equity
Evaluate the potential payout based on the company's growth prospects and exit opportunities
Negotiate your equity package based on your research and understanding of the company's value

Who Needs to Know This

Founders, employees, and investors in startups can benefit from understanding the true value of equity to make informed decisions about compensation and investment.

Key Insight

💡 The 'on paper' value of startup equity is often misleading, and considering factors like vesting, valuation, and potential payout is crucial to understanding its true value.