Luke Beseda · · 4 min read
Photo credit: Sira Anamwong
For many people, getting an offer from a startup creates mixed emotions.
Often, the role would sound perfect during the interview process, only to find that the offer package is far from expectations. The cash compensation is likely lower than competing offers, and instead, candidates are told that equity is the path to future riches.
Even for seasoned startup veterans, understanding the value of equity can be challenging. This is compounded by the fact that many founders, recruiters, and hiring managers often lack a deep understanding of it themselves. The disparity between how candidates and companies prioritize equity leads to declined offers across the startup ecosystem.
To address this challenge, our Talent Infrastructure team at Lightspeed recently hosted a portfolio company workshop to discuss equity fundamentals and share best practices on selling the value of equity. We want to share some learning from the session to help startups improve their ability to hire top candidates.
It starts with a simple question: Why would anyone take lower cash compensation to join a high-risk startup?
The best companies don’t just give details of the offer. They use real-world exits (IPOs or acquisitions) to tell a compelling story about its potential value.
We recommend creating three scenarios, which are outlined in this graphic:
A slide from Lightspeed’s Equity and Offer Process Optimization workshop
A few tips:
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Community Writer
Luke joined Lightspeed in 2014 as the founding member of the Talent Infrastructure team, where he supports startups ranging from single-person Seeds through multi-thousand employee pre-IPO companies. Luke spends his days helping founders solve challenges spanning recruiting, HR, people operations, compensation strategy, and more.
