Despite all the jokes here about your equity being worth very little, most of them are probably right. Of course it depends on the specific company, but if we

Despite all the jokes here about your equity being worth very little, most of them are probably right. Of course it depends on the specific company, but if we are talking about a late stage startup in SV then they are most likely overcapitalized, and might end up IPOing at a price lower than their current valuation. This would make your common stock worth proportionally much less. The valuation = 2x strike price thing is standard. Common stock valuation is always worth much less than preferred stock, because of the liquidation preferences (usually it's closer to 1/3 of the value). Often recruiters will use this to make it sound like you are getting an awesome deal. To answer your question (should you give up more salary in return for more options/stock), the main question you have to ask yourself is "Do I think this company will IPO or be bought for _higher_ than the current headline valuation". If the company raises more money before their exit, then do you think they will go on to exit for an even higher valuation than their next round? If the company ends up exiting for a valuation that is lower than their current valuation, then you would have been much better off taking cash in the first place. Even if they exit at a higher valuation than they are today, but in the meantime they had raised some more money (and the final exit is lower than their last valuation), then it will affect the value of your common stock for the worse. If you are being offered ISOs rather than RSUs, you also have to understand the fact that you may end up in a position where you can't leave the company without purchasing your overvalued common stock (see: golden handcuffs). If you don't understand the differences between common stock, preferred stock, liquidation preferences etc, I would highly recommend the book Venture Deals by Brad Feld[1]. It's written for startup founders, but equally useful for understanding employee stock options. [1] http://www.amazon.com/gp/product/B00AO2PWOI/ http://www.amazon.com/gp/product/B00AO2PWOI/