Equity Offer Evaluation
The process of assessing the real value of equity in a job offer beyond just the share count.
Definition
Equity offer evaluation is the process of assessing the real potential value of an equity grant in a job offer. Key inputs include: number of shares, strike price or grant price, fully diluted share count (to calculate ownership percentage), latest valuation, expected future dilution, liquidation preferences, and estimated time to liquidity. Without all these inputs, a share count is meaningless.
Why it matters
This is the most important analysis to do when evaluating a startup job offer. Ask for the fully diluted share count, latest 409A price, preferred stock price, total raised capital, and liquidation preferences. Without these, you are flying blind.
Example
Offer: 50,000 options, $2 strike. You ask: fully diluted shares = 25M (you own 0.2%), last round valuation = $125M (your stake is worth $250K minus $100K strike = $150K paper value). With $30M in preferences and expected 30% dilution, realistic exit value at $300M is about $240K.