towards liquidity over the last decade was the war for talent . Private companies have become much larger , but the draw for startups to attract employees was always in the equity . You knew that you were taking a job where you were going to be fairly underpaid from a market perspective in your base salary . However , you ' re going to have the upside of equity , which could create an asymmetrical outcome , financially , for yourself .”
But what happens if these companies stay private for longer ? “ Now , we have companies that are worth billions – even tens of billions of dollars and they ' re financially sound – and they ’ ve raised a tonne of capital . But as valuations increase , you obviously don ' t have quite the same upside in any new equity you receive as you did when you were a small startup worth a few million dollars ,” Swan says .
He goes on to explain that a shift has occurred , where these companies have to start paying more competitively on base salaries . But , they may also have to be competitive on the equity front . And very often in these cases , private companies are competing with large public companies .
“ So , if I ' m a senior engineer looking at joining one of these late-stage private companies and I ' ve got an offer from them and I ' ve got an offer from one of the world ’ s leading public tech companies – they may be very similar in terms of the base salary , and even the value of the equity I ' m getting . But one big difference is that in a public
40 March 2023