How to compare TC between startups and public companies?
When you want to compare an offer from a company that's publicly traded and a startup, I tend to account for the stocks from the company as regular cash salary (under the current appreciation) to calculate TC. However, I am not sure how to account for the startup equity ? What's the right way to weigh in the equity ? For those who will ask: no TC, I prefer to GTFO.
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One of the challenges with startup is valuation, since the stock does not trade in open markets. One signal to look at is the caliber of VC and past successes of founding Team. Second signal is increase in funding rounds, example series A at $5mn, Series B at $20mn, Series C at$100mn, May indicate a healthy increase in notional value by investors. TC is more certain for public companies Vs startups, hence the risk premium and an opportunity to make disproportionate returns of the startup gets acquired or IPO’s. Keep in mind 9 our of 10 startups fail, so you need to believe that the startup has product market fit and a large addressable market, to be attractive to current and future VC’s
Thanks, it all makes sense! To be more specific, I am talking about a startup after (big) series A stage with very mature product and big customer base. Still, I tend to follow the equation (big comp.) Base + RSUs = (startup) salary. One more thing that troubles me is how to translate % of equity to number of stocks and ultimately (potential) equivalent money in the future..