One way to make sense of the risk premium is to think of the grant in absolute dollar terms. When a company is just starting out with no product and no funding,

One way to make sense of the risk premium is to think of the grant in absolute dollar terms. When a company is just starting out with no product and no funding, the value of the business is very low (more or less just the founding team's value). In this situation, the company is likely worth a couple hundred thousand to a couple million tops. 33% of that is likely in the hundred thousand dollars range. Once the company has a product, funding and some traction, the business' value is now likely at least a few million to tens of millions. 1-2% of that is also in the hundred thousand dollars range. Yes, the founders' stake is now significantly more, but it wasn't when it was granted. They built the company's value and their stock value appreciated. When you join a startup, you have the ability to do exactly the same thing!