A startup offer might look something like this:
₹24 lakh salary + 10,000 ESOPs.
The salary is easy to compare with another offer.
The 10,000 options are not.
How much are they worth? When do they vest? What will you pay to exercise them? What happens if you leave? How much could future funding dilute your ownership? And does the company actually have a realistic path to providing liquidity?
For employees considering startup roles in India, these questions can matter as much as the headline number in the offer.
Negotiating equity isn't just about asking for more options. It's about understanding the terms behind them.
Before negotiating, establish whether the offer is for:
These instruments aren't interchangeable.
An ESOP, for example, generally gives an employee the right to acquire shares subject to the terms of the scheme. Receiving 10,000 options therefore does not necessarily mean you immediately own 10,000 shares.
Ask the company to explain the award in plain terms before discussing whether the number is attractive.
Suppose Startup A offers you 20,000 options and Startup B offers 10,000.
It would be tempting to conclude that Startup A is offering twice as much equity.
But the number of options by itself doesn't tell you enough.
You need to understand:
What percentage of the company do those options represent?
A grant of 20,000 options in a company with 10 million relevant shares is a very different proposition from 20,000 options in a company with 100 million.
Ask whether the percentage is being calculated against:
The denominator matters.
An option grant can come with an exercise price: the amount an employee may need to pay to acquire the underlying shares when exercising the options.
For example:
10,000 options × ₹20 exercise price = ₹2 lakh
That ₹2 lakh is not necessarily payable when the options are granted. The timing and conditions depend on the company's scheme and documentation.
But it is still important to know the potential cash requirement.
An employee who negotiates a larger grant without understanding the exercise price could end up with a much less useful package than expected.
A grant isn't necessarily earned immediately.
The company may use a multi-year vesting schedule, potentially with a cliff.
For example:
Grant: 20,000 options
Vesting: 4 years
Cliff: 1 year
Subsequent vesting: monthly or quarterly
The exact structure varies between companies.
If you are negotiating the equity component, don't just ask “How many options?”
Ask:
“How does the vesting work?”
Also ask when vesting starts.
Does it begin on your joining date, grant date or another specified date?
That distinction can matter, particularly if there is a gap between joining the company and receiving formal approval for the grant.
This is one of the most important questions to ask before accepting an equity package.
Suppose you receive 20,000 options and 12,000 have vested when you leave.
What happens to them?
The answer depends on the company's scheme and documentation.
You should understand:
A grant can look attractive when you join and have very different practical implications if you leave two years later.
Your equity is connected to the company's wider capitalisation.
Before negotiating, try to understand the broad structure:
You do not necessarily need every detail of the company's cap table.
But you should have enough information to understand where your grant sits within the overall ownership structure.
Imagine you are offered options representing 0.1% of a startup on the basis of its current capitalisation.
The company subsequently raises new funding and expands its employee option pool.
Your number of options may remain exactly the same.
But your percentage ownership can decrease because the company's total equity base has increased.
That's dilution.
This doesn't necessarily mean anything has gone wrong. Dilution is a normal consequence of issuing additional equity.
But employees should understand that the percentage quoted at the time of joining isn't necessarily a permanent percentage of the company.
You probably won't be able to predict exactly how much dilution you will experience.
But you can ask useful questions.
For example:
“Is the percentage you've quoted based on the current cap table or fully diluted capitalisation?”
“Does the ESOP pool already include grants that haven't been issued?”
“Are there plans to expand the option pool as part of the next funding round?”
These questions can give you a better understanding of what the number in your offer actually represents.
Employees often hear:
“The company is valued at ₹500 crore, so your equity could be worth ₹X.”
Treat this as a starting point for understanding the economics, not as guaranteed compensation.
A private company's valuation can change substantially between funding rounds.
And the value of an employee's equity depends on more than the headline valuation.
Factors can include:
So ask how the company arrived at its estimated equity value.
Having equity and being able to sell equity are two different things.
A private startup doesn't necessarily provide employees with a market where they can sell their shares whenever they want.
Potential liquidity could come through events such as:
None of these should be assumed simply because a company has raised significant funding.
If equity is an important part of your compensation, ask:
“How have employees historically received liquidity, if at all?”
and
“Is there currently a liquidity programme or a documented mechanism for employees to realise value?”
The company may not be able to promise a future liquidity event, but its answer can help you understand the practical context.
Equity can have tax consequences, and the timing can differ depending on the instrument and transaction.
For ESOPs, employees may need to consider tax implications at exercise and potentially again when shares are sold, depending on the applicable rules and circumstances.
The tax treatment can depend on factors including the nature of the award, the employee's status, the company and the transaction.
So don't negotiate an equity package based solely on its pre-tax headline value.
For a significant grant, getting independent tax advice can be worthwhile.
It's not just “Give me more options”. Depending on the company's flexibility, you could discuss the following.
| What to discuss | The question to ask |
| Grant size | Could the company increase the number of options? |
| Vesting | Is there flexibility around the vesting start date or schedule? |
| Exercise terms | Can the company explain the exercise price and post-employment exercise window clearly? |
| Review grants | Will there be an opportunity for a refresh grant after a certain period or promotion? |
| Cash vs equity | Could part of the compensation package be rebalanced between salary, bonus and equity? |
Not every startup will negotiate every term. But understanding the available levers gives you a more productive conversation than simply asking for a larger number.
Imagine you have two startup offers.
Startup A
₹26 lakh salary
8,000 options
Exercise price: ₹25
4-year vesting
Startup B
₹23 lakh salary
20,000 options
Exercise price: ₹5
4-year vesting
It would be premature to choose between them based on the option count.
You would want to know the companies' respective capitalisation, what percentage the grants represent, the vesting and leaver terms, the exercise mechanics and the potential liquidity pathways.
The comparison then becomes:
Cash compensation + equity terms + risk + potential upside
rather than simply:
₹26 lakh vs ₹23 lakh + 8,000 vs 20,000 options.
Before accepting a startup offer, make sure you can answer:
You don't need to become a cap-table expert before accepting a job.
But you should understand what you are actually being offered.
For companies, negotiating equity is only the beginning.
Once grants are made, HR and finance teams need to keep track of every employee's grant, vesting schedule, exercise activity and changing ownership position.
Vestd India provides a central platform for managing employee equity alongside the wider cap table.
Teams can manage:
That gives companies a clearer way to maintain the information employees need when understanding their equity, while keeping the underlying ownership records organised.
Negotiating startup equity isn't about putting the biggest number possible next to your name.
It is about understanding what that number represents.
A smaller grant with favourable terms can have a different economic profile from a larger grant with a higher exercise price, restrictive post-exit terms or a very different ownership denominator.
Before you negotiate, understand the instrument, percentage, vesting, exercise price, leaver provisions, dilution, liquidity and tax considerations.
Then negotiate from information rather than the headline number.
Because “10,000 options” is an offer.
Understanding what those 10,000 options could actually mean is the negotiation.