This depends on the situation. There are times when an "employee" is really a founder, but the founders don't want to admit this. Even if there is a salary, t

This depends on the situation. There are times when an "employee" is really a founder, but the founders don't want to admit this. Even if there is a salary, the financial situation may be very unstable (ie., making payroll may be an issue). This is often the case for very early employees, and seems to happen most when non-technical founders are hiring their first progammer. In this case, I think the founders should really be either bringing on a technical person as a founder or paying a contractor. It's a sign of a pretty clueless bunch of managers, either way. The other situation (which I am in right now) is when you have a fully functioning "startup". The business may not be cash flow positive, but it's been around for a while, has a stable funding base, a product, and probably some customers. In this case, a very small bit of equity is reasonable, because the employee is really working for a salary, plus a chance at a nice payout (maybe up to a mil, but no more than that). My advice is that you evaluate the company - they need to be in category 2 for this offer to make sense. By the way, I agree with you that the risk can be "greater" in some situations for the employee than for the founders. The founders have more control over the exit than the employees do, and they'll see trouble coming from much further out.