Evaluate a startup offer on two separate questions: whether the job is right for you, and whether the company can support it. Compare guaranteed pay and benefits with your current compensation, investigate the company’s financing and customer evidence, and treat private-company equity as uncertain and potentially unsellable. Before resigning, understand the written terms and decide whether your household can manage the downside if the role ends early.
Start with a side-by-side comparison
Do not compare your current salary with a startup’s headline compensation package. Separate cash you can count on from amounts that depend on a bonus target, continued employment, equity value, or future liquidity. Put the terms in writing and compare them with your current total compensation and benefits.
| What to compare | Questions to answer |
|---|---|
| Guaranteed cash | What is the base salary? Is any signing or relocation payment guaranteed, and are there repayment conditions? What makes a bonus payable? |
| Equity | What instrument is offered, what documents govern it, and what costs, vesting conditions, dilution, or liquidity restrictions apply? |
| Benefits | When does health coverage begin, what will it cost, and what happens to retirement contributions or unvested benefits? |
| Work and career | What will you own, who will manage you, and what resources and authority will you have? |
| Personal downside | How long could your household manage if the job ended sooner than expected and the equity had no usable value? |
There is no universal formula for weighting these factors. Make your priorities explicit: a household that depends on stable income may weigh guaranteed cash and benefits more heavily than a candidate with substantial savings and a high appetite for uncertainty.
Assess the company without treating funding as a guarantee
A polished pitch or recent funding announcement does not establish that a young business is stable. Early-stage businesses may not have the mature revenue and income record of established companies, and their prospects remain uncertain. The SEC notes that securities issued by startups can involve risks and limitations different from publicly traded investments (SEC investor guidance on investing in a new business).
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Ask for the reasoning behind leadership’s outlook, not just its conclusion. Useful questions include:
- Who pays for the product, and what evidence shows customers continue to pay or use it?
- What are the next product, revenue, customer, or financing milestones?
- What cash is available, what is the current net burn, and what spending or hiring changes are planned?
- What assumptions underpin the runway estimate, and what would the company do if financing took longer or growth slowed?
A runway figure is only meaningful in context: it depends on cash, spending, and assumptions that can change. No fixed number of months can guarantee that a company will remain solvent or that your job will continue. Treat answers as evidence to weigh, not proof of safety.
Check the actual job, manager, and career trade-off
Ask what success looks like in the first six and twelve months and what resources will be available to achieve it. Clarify the reporting line, decision authority, team size, priorities, and how the role might change if the company’s plans shift. If practical, speak with prospective peers to understand how work is assigned and decisions are made.
Then compare the role’s learning, ownership, and possible career path with what you have now. These are personal judgments, not inputs to a validated formula that can predict an individual career outcome. A broader title is not necessarily greater authority; ask what decisions you will actually control.
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Value compensation by what is guaranteed
Compare base salary separately from discretionary or target bonuses, equity, and benefits. Review written terms for signing or relocation payments, severance, paid leave, work location, expected hours, and any benefit subsidy. Do not rely on a verbal intention or assume severance will be provided unless the offer or another binding document says so.
Model a downside case: the job ends earlier than you expect, any bonus is unpaid, and the equity cannot be sold or turns out to have no value to you. Consider your savings, fixed expenses, dependents, and how long you could manage an income interruption. If the resulting risk is unacceptable, negotiate terms or decline rather than treating possible equity upside as a substitute for income you need.
Rank #4
- Author: Guillebeau, Chris.
- Publisher: Currency
- Pages: 304
- Publication Date: 2012-05-08
- Edition: NO-VALUE
Understand the equity before assigning it a value
Ask for the exact instrument and the documents that govern it. Options, restricted stock, restricted stock units (RSUs), SAFEs, and convertible notes are not interchangeable. A SAFE is not ownership of shares until its conversion terms are triggered. The SEC explains that an option is a right, not an obligation, to buy shares at an agreed strike price after vesting; the rights attached to securities depend on their form (SEC investor guidance on investing in a new business).
If the offer includes stock options
Request the grant and plan documents and verify the details before accepting. In particular, ask about:
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- The number of options and the class of stock they cover.
- The strike price and how it was set.
- The vesting schedule, including any cliff.
- The expiration date and the period to exercise after employment ends.
- What happens to the award in an acquisition or other change of control.
- Any exercise cost and potential tax consequences.
- How the grant compares with fully diluted capitalization and what future dilution could do to your percentage.
The number of options or a stated paper value is not cash compensation. Ask what assumptions support any estimated value and whether there are restrictions on selling the shares. Private-company securities are often illiquid; a possible IPO, acquisition, merger, or liquidation is not a promised outcome, and timing and proceeds are uncertain (SEC investor guidance on investing in a new business). Have a qualified legal or tax adviser review the documents and implications for your circumstances.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Plan health coverage and retirement before giving notice
Health insurance
Ask when you and any dependents can enroll, what employee and dependent premiums will be, which providers are in network, and what coverage applies in the gap before eligibility. In the United States, the Department of Labor says a new plan may have a waiting period of up to 90 days after eligibility (Department of Labor: waiting periods).
COBRA can allow temporary continuation of coverage in qualifying circumstances, but it is not the only possible route. Under federal COBRA rules, a participant generally pays the full premium plus up to 2 percent. Depending on eligibility and timing, a spouse’s or dependent’s plan, Marketplace coverage, Medicaid, or CHIP may also be options. Check the applicable plan rules, deadlines, and state requirements; these are U.S.-specific protections, not universal rules (Department of Labor: COBRA continuation coverage).
Retirement benefits
Check your current plan’s vesting schedule and identify any employer match or other benefits you would forfeit by leaving. Ask when you become eligible for the startup’s retirement plan, whether it offers an employer contribution, and what vesting and contribution rules apply. The Department of Labor advises workers to understand retirement-plan effects when changing jobs (Department of Labor: changing jobs).
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- What is the company’s current financing position, and what must happen before its next financing or cash-flow milestone?
- Which customer, revenue, retention, or product evidence supports leadership’s plan, and what remains uncertain?
- What would change if financing takes longer or growth is slower than expected?
- What outcomes are expected from this role at six and twelve months, and what authority and resources come with it?
- What exact equity instrument is offered, and can I review the plan and grant documents before accepting?
- If options are offered, what are the strike price, vesting schedule, post-termination exercise period, expiration, and acquisition treatment?
- When can I enroll in health coverage, what will employee and dependent coverage cost, and which providers are in network?
- What retirement benefits or unvested compensation would I give up by leaving my current employer?
- Which compensation, severance, and benefit terms are guaranteed in writing?
Make the decision against your own risk capacity
Decide only after you can explain the trade-off in concrete terms: what guaranteed cash and benefits you are giving up, what the new role offers, what must go right for the company, and what you would do if the job ended early. Verify the offer and equity documents, check benefit-transition dates and costs, and consult qualified advisers on legal or tax questions that depend on your award or location. A startup may be the right move, but neither funding nor equity makes it a dependable substitute for guaranteed compensation.
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