How To Successfully Negotiate Equity When Joining A Startup

When negotiating equity at a startup, women too often leave money on the table. According to Carta’s 2024 Annual Equity Report, women constituted 33% of new hires in equity-receiving positions in 2024, yet received only 22.5% of the total equity issued. A study from the American Psychological Association also found that women receive 15% to 30% fewer equity grants than men, even when controlling for job role and qualifications. Those numbers represent a significant gap in equity allocation, leading to lost long-term wealth.

“Women founders typically ask for less capital,” said Alli McCartney, managing director at UBS Wealth Management. “On the exit side, women give equity away much more quickly [than men]. This could be lack of greed, but in a concerning way, you may part with really valuable ownership along the way.”

Whether you’re joining as an early employee or stepping into a leadership role, negotiating your equity package is about more than compensation. It’s about claiming your stake in the company’s future. Here’s how to do it with confidence.

Before you can negotiate equity, you need to know what you’re being offered and what that offer is really worth. Three foundational terms of equity to understand are vesting schedules, dilution, and types of shares.

Vesting refers to when you will actually own your equity. Typically, equity vests over 4 years with a one-year cliff. This means you’ll earn 25% of your equity after your first year (and nothing if you leave before one year.) The remaining 75% will vest monthly or quarterly over the next three years, depending on your company’s outline. For example, during my experience at Yelp we had a one-year vesting cliff followed by a quarterly vesting schedule. You should always ask for a clear vesting schedule in your offer letter so you can know when to expect the option to purchase your shares.

Dilution is the term for when a company issues more shares. This often occurs during fundraising rounds. When this happens, your percentage of ownership declines, even if the number of shares you own stays the same. An important consideration is not only how many shares you get but also what percentage of the company they represent. Many times as an employee, you won’t have enough shares to have a percentage, but if you are a high-level, early executive you’ll want to negotiate with the percentage in mind, especially in case of dilution.

There are several types of shares you can be offered as part of your equity, and they aren’t all created equal. Here are some of the most common ones offered: Common Stock (standard equity for employees), Preferred Stock (usually reserved for investors), Restricted Stock Units (also known as RSUs), and Stock Options. Stock Options can come as ISOs (Incentive Stock Options), which have a set strike price and tend to be tax-favored for employees, or NSOs (Non-Qualified Stock Options) which are taxed less favorably.

When offered stock options, you want to ask about the strike price (how much you’ll pay per share to own them), type of option, and tax implications. During my experience with Yelp, I learned that stock options are usually taxed twice, once when they are exercised (when you purchase them) and again when you sell them. ISOs can qualify for special tax treatment so learning the tax implications of any stock options you are granted is an important key to managing your financial health with equity grants.

Danielle McLaughlin, Founding Head of Talent at The New Club, highlights that successful negotiations start well before the offer.

“The first step is defining your non-negotiables,” she says. “What are you really bringing to this team and what do you expect in return?”

Consider things like:

• How much flexibility do you have in your life across time, finances, or energy?
• What are the key skills you bring to the table that set you apart from other early team members?
• What is your desired equity percentage?

Once you’ve clarified what matters to you, research market ranges for your role and experience and then think about what things are negotiable. For example, is there room to negotiate your title or responsibilities? Or do you want to bring up the trade-off between cash (in terms of salary) and equity? This preparation helps articulate your value and align it with the company’s compensation structure. You’ll then be able to ask for equity ranges tied to your role, and counter with data as necessary.

Danielle also emphasizes the importance of grasping how equity is often allocated in startups. She notes that founders typically receive 50–60% of the equity pool, investors get about 20–30%, and employees are allocated around 10–20%. This knowledge is crucial for setting realistic expectations during negotiations.

Negotiating equity can feel intimidating, especially if you’re new to startups. That’s why building a support network is key according to Doone Roisin, founder of Female Startup Club. She highlights the need for women to seek out mentorship and build a community that can help provide guidance and support during the negotiation process. 

“We all know how fast the digital world is changing; AI is disrupting literally everything faster than we can imagine, but something I truly believe will never change is connection. And connections. A powerful network still matters,” says Doone

Mentors, peers, and even negotiation coaches can help you practice your ask or review offer letters. You can turn to resources like Doone’s Female Startup Club, 81 Cents, or Her Entrepreneurial Rise. The more people you have in your corner, the more likely you are to walk away with a transformational deal instead of just an okay one.

Like everything in business, equity isn’t a favor. It’s your share of the value you’re helping build.