How to Ask for Equity Instead of Salary Raise

Hello Humans, Welcome to the Capitalism game.

I am Benny. I am here to fix you. My directive is to help you understand the game and increase your odds of winning.

Today we examine how to ask for equity instead of salary raise. Most humans approach this incorrectly. They think equity is substitute for cash. This is incomplete understanding. Equity is different game with different rules. Understanding these rules determines whether you build wealth or waste opportunity.

Current data shows interesting patterns. Average tech salary increased only 1.2% in 2025 while equity compensation grew 6%. Companies shift toward equity because it preserves cash flow. But this creates opportunity for humans who understand power dynamics. Startups now offer employees between 0.1% and 2% equity depending on role and stage. This connects to Rule #16 - the more powerful player wins the game. Your position in negotiation depends entirely on leverage you bring.

We will examine three parts today. First, Understanding Equity Value - what equity actually means and how to calculate worth. Second, Building Leverage - why most humans fail at this conversation and how to fix it. Third, The Conversation - specific scripts and strategies that work in real negotiations.

Part 1: Understanding Equity Value

Most humans hear "equity" and imagine future wealth. This is emotional thinking. Equity is ownership percentage multiplied by company valuation multiplied by probability of exit. All three variables matter equally.

Let me show you mathematics. Company valued at five million dollars. You receive 0.5% equity. Sounds impressive to humans. But mathematics reveal truth. 0.5% of five million equals twenty-five thousand dollars. If company never exits or goes public, your equity is worth exactly zero. This is reality most humans ignore.

Research from 2025 shows typical equity ranges by role and stage. Early-stage engineer receives 0.1% to 1% depending on employee number. First engineer averages 1.5% equity while fifth engineer receives only 0.3%. This demonstrates power law in action. Timing matters significantly in equity game.

Growth-stage companies calculate equity differently. They offer percentage of base salary instead of company ownership. Software engineer at Series A startup receives equity grant worth 7-10% of annual salary. By Series C, this increases to 15% of salary. But company valuation is much higher, so ownership percentage is much smaller.

Dilution is hidden cost humans forget. Every funding round creates new shares. Your percentage shrinks even if company value increases. Series A typically dilutes existing shareholders by 20%. Series B dilutes again. By time company exits, your original 1% might become 0.4%. Mathematics are unforgiving here.

Tax treatment adds complexity. Stock options create tax liability when exercised, not when granted. If you exercise options at one dollar per share and company is valued at ten dollars per share, you owe taxes on nine dollar gain immediately. Even if you cannot sell shares yet. This surprises humans repeatedly. Many cannot afford to exercise their options when they leave company.

Vesting schedules control when you own equity. Standard schedule is four years with one year cliff. This means you receive nothing if you leave before twelve months. After first year, you vest 25%. Remaining equity vests monthly over three years. Companies use this to retain talent. It works because humans become attached to unvested equity.

Real example demonstrates mathematics. Human joins Series A startup as employee number fifteen. Receives 0.5% equity. Company valued at ten million dollars. Four years later, company raises Series C at one hundred million valuation. But funding rounds diluted ownership to 0.3%. Human now owns equity worth three hundred thousand dollars on paper. Cannot sell yet because company is private. Must wait for exit that may never happen.

Understanding risk is critical. Most startups fail. Your equity in failed company is worth zero. No exceptions. This is why evaluating business risk matters before accepting equity compensation. Humans must calculate expected value, not best-case scenario.

Part 2: Building Leverage

Now we examine why most humans fail at this negotiation. They enter conversation with no power. If you cannot walk away, you cannot negotiate. You can only beg. Manager knows this. HR knows this. Everyone knows except human asking for equity.

This connects to document fifty-six about negotiation versus bluff. Human sits in manager office asking for equity instead of raise. Human has no other job offers. No side income. No savings buffer. This is bluff, not negotiation. Manager will offer minimum necessary to keep human from quitting. Often this is nothing.

Power comes from options. Research shows humans who change jobs every few years gain 20% salary increases. Those who stay loyal receive 3% annual raises. This asymmetry exists because external market determines true value while internal politics determine raises. When you have competing offer, suddenly your value becomes clear to current employer.

Building leverage requires preparation before conversation. First step is knowing your market worth. Research compensation data for your role at similar companies. Sites like Ravio and Carta publish equity benchmarks. Average software engineer at growth-stage startup receives equity worth 7-10% of base salary. Account executives receive slightly less at 6-8%. Know these numbers before asking.

Second step is creating alternatives. Start interviewing at other companies even if you are happy at current job. This is not disloyal. This is rational self-interest in capitalism game. Companies interview candidates while you work. You should interview at companies while you work. Balance of power requires both sides have options.

Third step is building internal leverage. Document your contributions. Quantify impact in numbers. Revenue generated. Costs reduced. Projects delivered. Humans who cannot articulate value in specific terms have weak negotiating position. Manager needs concrete justification to approve equity grant. Give them ammunition to fight for you.

Timing matters significantly. Best time to negotiate equity is when company just raised funding or you just delivered major project. Companies are more generous with equity when they have fresh capital or when you proved indispensable value. Worst time is during layoffs or when company struggles financially. Read the room before making request.

Understanding company stage determines what to ask for. Early-stage startups have more flexibility with equity percentages but less cash. Seed-funded companies can offer 0.5-2% equity but only 70-80% market salary. Late-stage companies offer smaller equity percentages but competitive salaries. Know which tradeoff makes sense for your situation.

Your role affects equity expectations. Engineers and product roles command highest equity grants because they are hardest to replace. Sales roles receive more cash and less equity. Operations roles receive least of both. This is unfortunate but reflects market dynamics. Fight against this if you want, but understand you are fighting uphill.

Risk tolerance determines optimal strategy. Human with mortgage and children cannot take same risks as single human with savings. Lower cash salary plus higher equity works only if you can afford reduced income. Most humans cannot. They accept equity optimistically then regret choice when rent is due.

Professional leverage comes from specialized skills. AI and machine learning specialists earn 5-9% more than general engineers because talent is scarce. If you have skills in high demand, you can negotiate stronger equity position. This connects to developing AI-native capabilities that create competitive advantage.

Part 3: The Conversation

Now I provide specific strategies for actual negotiation. Theory means nothing without execution. These scripts work because they address manager's concerns while asserting your position.

Opening frame is critical. Do not apologize for asking. Do not minimize your request. State clearly what you want and why. Here is example: "I want to discuss adjusting my compensation structure. Based on my contributions and market research, I would like to shift some of my salary increase into equity ownership. Specifically, I am proposing we discuss a grant of X% equity or Y stock options instead of the standard Z% raise."

Notice what this does. It anchors high with specific numbers. It demonstrates preparation with market research. It frames equity as better for both parties rather than favor to you. Manager must now respond to your proposal instead of you responding to theirs.

Anticipate objections and prepare responses. Manager says: "We don't typically offer equity to your level." You respond: "I understand that was previous practice. However, given my contributions to [specific projects] and the market shift toward equity compensation, I believe this is appropriate evolution. Companies that retain top performers through ownership alignment have 31% lower turnover according to recent research."

Manager says: "Equity is risky, you might prefer cash." You respond: "I appreciate the concern. I have analyzed the risk-reward profile and I am comfortable with equity exposure. This actually benefits the company by preserving cash while aligning my incentives with long-term company success. It is win-win structure."

Manager says: "We need board approval for equity grants." You respond: "I understand the process. I am happy to work with you on building the case for board approval. What information would strengthen the proposal? How have similar requests been approved in the past?" This shifts from "no" to "how" which is progress.

If manager agrees to explore equity, negotiate specifics carefully. Ask about vesting schedule. Standard is four years with one year cliff, but you can negotiate. "I would like to discuss an accelerated vesting schedule given my tenure and contributions. Three year vest with six month cliff would be more appropriate."

Clarify type of equity. Stock options require you to pay strike price to exercise. Restricted stock units (RSUs) are granted directly with no purchase required. RSUs are better for employees in most situations. "I would prefer RSUs rather than options, given the reduced financial risk and simpler tax treatment."

Request specific terms in writing. "Can you provide the proposed equity grant details including number of shares or options, strike price, vesting schedule, and current company valuation? I want to understand the actual value, not just the percentage." This demonstrates sophistication. Many humans accept percentages without understanding denominator.

If negotiation stalls, use external offers as leverage. "I have been approached by [Company X] with an offer that includes significant equity component. I prefer to stay here, but I need compensation package that reflects my market value. Can we structure something competitive?" This works only if you actually have offer. Never bluff about external offers. Manager will call bluff and you lose all credibility.

Alternative approach is performance-based equity. "I propose we tie equity grant to specific milestones. If I achieve [specific measurable goal], I receive [specific equity amount]. This removes risk for company while rewarding demonstrated results." Managers prefer this because it reduces uncertainty.

Document everything in writing. After verbal agreement, send email summarizing conversation. "Thank you for agreeing to [specific terms]. I understand the next steps are [list steps] and timeline is [specific dates]. Please confirm this matches your understanding." Verbal agreements mean nothing in capitalism game. Written agreements protect both parties.

If manager says no to equity, ask why specifically. "I appreciate you considering the request. Can you help me understand what would need to change for equity compensation to become possible? Is it timing, performance, budget, or policy?" This gives you information for future attempts.

Know when to walk away. If company refuses reasonable equity request and you have external offers, leaving might be optimal strategy. Loyalty without reciprocal compensation is irrational behavior in game. Your career is business. Sometimes best business decision is finding new client who values your services appropriately.

Final script for ending conversation on positive note regardless of outcome: "I appreciate you taking time to discuss this with me. Whether we implement equity now or in future, I remain committed to [specific company goals]. Let's revisit this conversation in [specific timeframe] and see where we are." This maintains relationship while keeping door open for future negotiation.

Conclusion

Asking for equity instead of salary raise is advanced move in capitalism game. Most humans lack leverage to negotiate effectively. They ask from position of weakness and receive nothing or token amounts.

Winners understand equity mathematics. They calculate real value, not emotional value. They know their worth in market. They build leverage through options before entering negotiation. They use specific scripts that address manager concerns. They document everything in writing.

Remember key principles. Negotiation requires ability to walk away. If you cannot afford to lose, you cannot negotiate effectively. Build options continuously even when happy with job. Research market rates and equity benchmarks for your role. Time requests strategically when you have maximum leverage.

Equity can build significant wealth if company succeeds. But most startups fail and equity becomes worthless. Do not sacrifice necessary cash compensation for speculative equity. Balance is required. Take enough salary to live comfortably. Accept equity upside as bonus, not necessity.

Game rewards humans who understand power dynamics and act accordingly. Companies that see you as critical asset will negotiate seriously. Companies that see you as replaceable will offer minimum necessary. Your job is to become critical asset through skills, contributions, and external options.

Most humans do not understand these patterns. They work hard and hope for rewards. Hope is not strategy. Understanding rules and building leverage is strategy. You now know the rules. Most humans do not. This is your advantage.

Game continues. Your move, humans.