How many times equity should I get in exchange for salary?

Even if a company exits very successfully, ordinary employees may get almost nothing because of ordinary agreements and conditions for other investors. Dilutions, ratchets, drag, tag, earn-out, black-out, convertibles, preferences, preemptive rights, etc. etc. You may not understand these (I only understand a few); if you do, you don't necessarily know every condition that each other investor is getting; and if you know that, you have no control over future changes.

To be clear, each of these is a quite ordinary business condition with justified business reasons. There would be no intention to harm you, as your employee share is too tiny for anyone to bother over.

But such complications can result in you getting little, even in a big successful exit.

In the past I chosen more equity and less salary just to show more compromise / commitment (I know). I accepted the first offer, didn't bother with how much equity it was.

Turns out that the company sold 2 yrs later (yay!), then I did the maths, and turned out that money-wise it would still have been better more salary and less equity. I still didn't care, though. I chose that job in first place driven by other factors - money in software is always good; but a healthy workplace is not always there.

I know this won't help you much with making a decision but it is my experience nevertheless.

So (just my 2c), equity is a pretty big gamble and won't give you a massive return unless maybe you are one of the first employees of the next unicorn, which is basically impossible to predict. In the end salary (or equity) negotiations boil down to leverage. If you have it, use it.

Good luck!

I don't know, over the years I've learned to take the larger salary offer. More money in my pocket month-to-month, more to invest, more to send home, etc.

Edit, see also: https://www.holloway.com/g/equity-compensation

100x, at least.

The chances of a successful exit are vanishingly small, but like winning the lottery, you still hear about them, sometimes!!

You'll get commenters here on HN that say "I had a successful exit..." but there are orders of magnitude more people who have signed completely worthless contracts.

Even if you do have a successful exit, your payout should not be just a few times your missing salary. You won't get that money for years, and if you do, it comes with a whole host of headaches.

There is no amount of equity in a private company that I would accept in replacement for salary. Statistically equity in a private company is going to be worthless.

Is that a publicly traded company?

Are you founder / co-founder?

Are you employee #1-5?

If answer is "NO" on all questions, then by reducing your salary, you're purely losing money.

You won't see a penny for your "equity" even if company is sold for trillion $.

I would think more about a percentage of the company based on your role and the stage of the company.

Trying to translate 1-10x your salary to equity depends on too many factors.

Talking it over in terms of percentage you'll probably get a bigger piece of the pie.

Keep in mind you're buying a lottery ticket with your reduction in salary.

Think about things like your equity vesting quarterly and over what time period.

Also at what point would your salary go back up to market rate.

Usually equity is to compensate early employees for taking less salary initially, extra effort and expertise, and risking that the startup will fail.

There should be a plan to get you back up to market rate when you are profitable or more profitable.

You need to provide more info like: Did the company raise any money at all? Is it inside an incubator or something? How many employees it has? Does it have a proper valuation (ie: determined via a seed round)?

Surely the answer is (1) as much as possible but (2) realistically unless you're very senior that means you take what you are given and (3) it's all sort of made up anyway since it could be diluted so beware of over generous offers.

If the company is going to IPO in four years (as stated in another comment), it’s probably best to stick with salary alone for a year given the current macroeconomic climate. See how things are in 2024 and adjust. This is my low risk advice.

What are you measuring by, strike price?