📈 You're Staying for the Equity. Do You Even Know What It's Worth?

"Stay - the equity is going to be life-changing." It's the most repeated sentence in tech, whispered across startups and FAANG offices alike. It keeps people in seats for years. And here's the part nobody says out loud: most of the people staying for the equity couldn't tell you what that equity is actually worth.

That's not an insult. Equity is deliberately confusing. But if a grant is the reason you're turning down other moves and tolerating things you'd otherwise leave, you owe it to yourself to know whether you're holding real wealth or an expensive piece of paper.

• 23% - Indian startup ESOP holders who can correctly explain their own grant - vesting, exercise price, and tax (Razorpay 2025 survey)

• ~30-40% - Effective tax that can hit ESOP gains in India (perquisite tax at exercise + capital gains at sale) (Indian ESOP tax guidance)

According to a 2025 Razorpay survey, only about 23% of Indian startup employees who hold ESOPs can correctly explain the basic mechanics of their grant. The other 77% either don't fully understand what they own or are unaware of the tax that hits when they finally try to cash out. We see similar patterns among Grug users: people negotiating offers will fixate on the headline grant value and skip every question that determines whether that number is real.

Why equity feels like wealth (and usually isn't yet)

When an offer says "₹40,00,000 ($47,700) in equity," your brain files it next to cash. But cash and a grant are not the same asset. Cash is liquid, certain, and already taxed. A private-company grant is illiquid, uncertain, taxed later at a rate most people underestimate, and contingent on you staying long enough to even own it. The headline number is the number they show you. The number that should drive your decision is what you can realistically expect to keep - and those two can differ by an order of magnitude.

Headline grant value is a marketing number. Expected net value is a decision number. The gap between them is made of four things: whether you'll vest, whether you can ever sell, how much dilution and tax eat, and the real odds of a meaningful exit. Until you've run those four, "stay for the equity" is a vibe, not a calculation.

The 3-Question Equity Test

Before any of the three questions, there's a precondition that disqualifies a lot of grants instantly:

Precondition - will you even reach the cliff? Most grants vest over four years with a one-year cliff. If you're realistically going to leave in 18 months, you'll walk away with a fraction of the grant - and if you leave before the cliff, you get nothing. Don't let a four-year number anchor a decision you'll reverse in year two.

Clear the precondition, then run the three questions. A grant has to pass all three to count as a real reason to stay.

Question 1 - Liquidity: can you actually sell, and when?

A grant you can't convert to money isn't wealth - it's a lottery ticket with a long expiry. Ask: is there a buyback program? How often, and at what valuation? Is a secondary sale allowed? Is an IPO a concrete plan or a founder's dream? The Indian reality is sobering: cumulative startup ESOP buybacks since 2020 total roughly $2 billion (Entrackr) - but that liquidity is lumpy and concentrated. A single Flipkart event drove most of 2023's $802 million; all of 2025 was just ~$75 million. Most employees at most startups never see a buyback at all.

Question 2 - Net value: what survives dilution and tax?

Two forces shrink your grant between today and payday. Dilution: every new funding round issues more shares, and your slice gets smaller unless you have anti-dilution protection (you almost certainly don't). Tax: in India, ESOPs can be taxed twice - as a perquisite at exercise (at your slab) and as capital gains at sale - pushing the effective rate to roughly 30-40%. So a "₹40,00,000 ($47,700)" grant, after a couple of dilutive rounds and tax, might net you a fraction of the sticker. Run that math before you treat the headline as your reason to stay.

Question 3 - Probability: what are the real odds of a meaningful exit?

Multiply everything above by the honest probability that this company reaches a liquidity event big enough to matter. Most startups don't. This isn't pessimism - it's expected value. A large grant in a company with a 10% chance of a meaningful exit is worth less than a modest grant in a company with a clear, near-term buyback. Headline value treats the exit as certain. Expected value doesn't.

Grug Signal: When Grug users evaluating an offer or a stay-or-go decision actually run these three questions - instead of anchoring on the grant headline - they negotiate better and decide with far less regret. Several who used the to pressure-test a "stay for the equity" decision discovered the equity was nowhere near a reason to stay - and repositioned for roles with real cash comp instead. Knowing the number changes the decision.

When equity IS worth staying for

This isn't an argument against equity - it's an argument against staying for equity you haven't valued. There are absolutely cases where a grant is a brilliant reason to stay: a near-term, credible liquidity event; a grant that's material even after a conservative dilution-and-tax haircut; a company whose odds you genuinely rate. That's exactly Gate 1 from our companion piece on why loyalty is a bad default in 2026 - equity is one of the only two reasons staying still makes sense. The whole point of this test is to tell a real Gate 1 from a story you've been told.

India Context: India's equity ecosystem is maturing, but the mechanics that decide your outcome are India-specific. Buybacks (not IPOs) are the main liquidity route, and under Section 115QA the company - not you - typically pays buyback tax, which changes your net. Watch your post-termination exercise window (leave, and you may have only weeks to exercise - and find the cash to do it), and remember the holding-period clock for long-term capital gains starts at exercise, not grant. Secondary platforms and ESOP financing exist, but they come with their own costs. None of this is a reason to dismiss Indian equity - it's a reason to read your grant letter line by line before you let it anchor a life decision.

The bottom line

"Stay for the equity" might be the best advice you ever take - or the most expensive story you ever believe. The only way to know is to run the numbers: clear the cliff, then check liquidity, net value, and probability. If your grant passes, stay, and stay happily. If it doesn't, you've just freed yourself from a golden handcuff that was never locked.

FAQ

My company keeps saying a buyback is coming. Should I count on it?

Count on it only when it's concrete - a stated cadence, a recent precedent, an actual valuation. "It's coming" with no specifics is a founder's hope, not your liquidity plan. Buybacks in India are real but lumpy; most years see far fewer than the headlines suggest.

RSUs at a big public company - same problem?

Less severe, because public RSUs are liquid the moment they vest and the value is visible daily. The questions that still apply: will you vest, and is the grant material after tax? The liquidity and probability questions mostly resolve themselves once shares are publicly traded.

Isn't all of this a reason to just avoid equity-heavy offers?

No - it's a reason to price them correctly. A well-valued equity offer at the right company can outperform a pure-cash role enormously. The mistake isn't taking equity; it's staying for equity you've never actually valued. See also: the Two-Gate Stay Test.