Why Startup Equity is Losing Its Shine
And What That Means for You
I've spent years speaking to thousands of candidates about their dream roles at startups. Historically, a huge part of the startup appeal has been equity—this golden promise that one day your small slice of the pie would turn into something life-changing. But lately, that's just not cutting it. Let’s talk about why.
The truth is, it has always been hard finding candidates genuinely excited by equity. Recently though, it's become crystal clear that candidates care less and less about stock options and far more about cash. This isn't just an anecdote; the data agrees. About 75% of candidates now prioritise their base salary and benefits package over equity. Given the market chaos with layoffs, tech downturns, and a cost-of-living crisis, I can't say I blame them. "Cash is king" has never been truer than in 2025.
Candidates, especially younger ones who've seen first-hand or second-hand how brutal the market can be, are demanding stability. Interestingly, these were the exact folks who used to dive headfirst into the risky startup world. Not anymore. They're now the ones asking tough questions about healthcare, pensions, and salary. Startups that used to lure talent with the allure of equity now find themselves needing to offer solid salaries, decent healthcare (particularly in the US), and retirement plans. Essentially, perks have evolved into basic expectations.
I've seen startups scrambling to adapt. They're still offering equity, certainly, but they're pairing it with competitive salaries and robust benefits to close candidates who would have easily been won over by equity alone a few years ago. This shift isn't subtle either; healthcare coverage is now considered non-negotiable by the vast majority of jobseekers, and retirement benefits such as a 401(k) are increasingly standard in offer packages.
If you're interviewing at startups today, here's some tough love: equity means absolutely nothing without context. I've spoken to countless candidates offered '5000 shares,' thinking it's a jackpot, only to realise later that without knowing the share price from the last funding round, those shares might be meaningless. Do yourself a favour and ask those awkward questions upfront. What's the current share price? What percentage of ownership do I get? If the startup can't or won't answer clearly, see that as a huge red flag. Blindly accepting equity isn't ambition; it’s gambling.
For those running startups, here's what I tell my founder friends. Scare your candidates a bit. Seriously. Be honest about the difficulties of working in a startup. Clearly explain what the equity represents and what it's realistically worth. Don't sugarcoat how hard it'll be. The candidates who remain excited after all that honesty are likely the right hires.
From the candidate perspective, especially for younger talent, I completely understand why you’re sceptical about equity. You've watched valuations crash, seen your peers laid off, and realised equity doesn't pay rent or bills. It's entirely fair to prioritise cash and benefits right now. However, don’t dismiss equity completely. It still matters; just ensure you fully grasp what you're signing up for.
Interestingly, the data backs this generational skepticism. Early-career professionals today are notably more cautious about equity promises, often favouring immediate compensation due to financial pressures and recent market volatility. Seasoned professionals with past successes in equity-rich startups still value equity highly, but they're increasingly the minority in the talent pool.
Startups are adjusting their compensation strategies significantly. A recent report noted that core benefits like healthcare and pensions have transformed from attractive perks into essential requirements for job candidates. More startups are also offering comprehensive health insurance and matching contributions to retirement plans earlier in their lifecycle than previously typical, clearly responding to the shifting priorities of candidates.
The broader market context further explains this cautious approach to equity. Post-2022 layoffs and tech slowdowns have fundamentally reshaped compensation trends. Total compensation packages have reset to more conservative and realistic levels, with equity grants shrinking significantly as startup valuations recalibrated. Salary growth, conversely, has been holding steady or slightly increasing as startups strive to offer stability and compete effectively for talent.
While equity might regain its appeal as market conditions stabilise, for now, candidates should remain focused on tangible compensation elements. Ask clear, direct questions about equity packages, push for transparency, and evaluate offers based on immediate financial security. Startups, in turn, should embrace these candid discussions, offering clear and realistic equity information alongside competitive cash and benefits.
This shift toward stability and cash might be temporary, closely tied to current economic uncertainty. But for now, if you’re job hunting in GTM roles, prioritise getting salary and benefits right, then ensure the equity offer is clear and fair. Demand transparency, ask tough questions, and don't settle for vague promises.
Startups are gradually adjusting. Candidates need to as well. Being informed and realistic is the best strategy to navigate this evolving compensation landscape.
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