{Salary Or Equity}

Break down your startup's offer letter


You can think of your equity as worth $______ per year in salary.


{1. INITIAL FUNDING}

The company has taken funding equal to $ at a $ valuation.

This means they sold % of the company for and implies that the total value of the company is .

They are offering you shares out of the shares they have issued.

This means you would own % which is worth at the current valuation.

NEXT STEP

{2. ADDITIONAL FUNDING}

Over time, you may get diluted. This happens because the company has to take in more money in order to get to a place where it can sell itself (hence A Round, B Round, etc.) This can actually be a good thing, because it means the company is growing and increasing in value.

So imagine they took in another $ at a $ valuation.

Because they would issue new shares, your % of the company is now only %.

But because the company is now valued at your portion is worth .

NEXT STEP

That means you can think of your equity as worth $______ per year in salary .


a work worth doing project by natalia rodriguez and matt wallaert

* This tool is not a crystal ball; your equity could eventually be worth a lot more or a lot less. But equity does have a potential value and while many startups fail, you join a startup because you believe it will succeed and because your efforts make that success more likely.