How does my offer compare?
Yin Wu avatar
Written by Yin Wu
Updated over a week ago

If you're granting equity to an employee, you need to clearly explain the potential value of the equity for an employee to properly compare competing offers.

First, educate your employee on how equity works. Typically, this means explaining that equity vests - which means that the employee receives it over time as they work. If they leave, they lose the amount of equity that had not yet vested.

Next, explain why your equity is so valuable. Use Pulley's offer letter generator and scenario modeling tool to help employees visualize how their small sliver of equity in a small company could turn into a significant amount of money if the company grows.

Finally, explain the risks:

  1. Equity is only worthwhile if the company succeeds. If the company fails or doesn't grow as rapidly as expected, the equity might not be worth as much as you expect.

  2. Dilution will happen to everyone. Even if an employee owns 1% at hire, it's unlikely that they will stay at 1% as the company raises more money because additional investors will dilute everyone that came before.

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