A founder tells you your 0.5% could be worth $5 million one day. Before you count on it, you need to know how much of that you’d actually keep, and what has to happen first.
If you’re interviewing at a space startup and want to understand the equity on offer, this blog is for you. In it, we cover how equity works and the questions to ask a founder before you sign on the dotted line.
Startup offers often pair equity with a lower salary than you’d earn at a bigger company. If you’re still deciding whether that trade works for you, start with our guide to weighing startup equity against salary.
How Space Startup Equity Works: Vesting, Cliffs and Dilution
Most space startup offers include equity: a grant of shares or stock options, often described as a percentage of the company. That percentage is where the conversation starts. How much of it you actually get depends on the terms of the agreement. These are the ones to understand before you sign, using Index Ventures’ guide to employee equity as the reference point:
- Vesting: you don’t get all your shares on day one. You earn them over time, usually a period of four years. Most companies also set a one-year cliff, a waiting period before anything vests. If you leave before your first year is up, you walk away with nothing. Once you reach the one-year mark, a quarter of your shares vest at once, and the rest usually vest monthly after that.
- Exercise window: stock options give you the right to buy shares at a set price. If you leave, US companies usually give you 90 days to buy your vested options, in cash. You may owe tax before you can sell anything. Carta found that by late 2024, employees were buying only about a third of their vested “in the money” options (ones worth more than the price to buy them). Cost is a big reason. Buying your options can mean dipping into your savings.
- Dilution: each funding round creates new shares, so your percentage shrinks. In Index’s example, 1% at seed becomes about 0.4% by Series D, though the stake can still be worth more in dollars.
- Preferred shares: investors usually hold preferred shares, which the company pays out first when it sells. Employees hold common shares, so a low-price sale can leave little for you.
The size of the grant matters too. Index’s US benchmark puts the average seed-stage grant for a senior engineer at about 1% of the company, though its figures cover all sectors, so treat that as a rough guide. Say you’re offered 0.5% and the founder is aiming for a $1 billion exit. That’s $5 million on paper. If the company raises three more rounds and each one sells 20% of the company, your stake shrinks to about 0.26%, or around $2.6 million. Preferred shares get paid first, so the real figure could be lower. Tax on equity depends on your situation.
Early Stage vs. Late Stage: How Company Stage Changes Your Odds
A 1% stake at a seed-stage company is a very different prospect from 1% at a Series C company. At a well-funded late-stage company, equity works more like a bonus on a fair salary. At seed, equity is the startup’s way of asking you to stay for the long haul. It only pays off if the company survives several more funding rounds.
Picture two job offers. One is from a Series C space company that has raised hundreds of millions of dollars and plans to go public in the next few years. Shares there are more likely to pay out, and sooner. The other is from a Series A company that has just raised its first big round and may be several years away from any payout. Those shares could end up worth far more, or nothing at all.
Early-stage companies are also the ones most likely to close down. In 2024, 966 US startups on Carta’s platform shut down, up from 769 the year before, and SimpleClosure found that 74% of shutdowns since 2023 were at pre-seed or seed.
Firefly Aerospace is an example of a startup that did make it big. When it went public on Nasdaq in August 2025, employees holding stock could finally sell it, once the usual lock-up period after an IPO had passed.
Questions to Ask a Space Startup Founder Before You Sign
Now put what you know about equity to use in your interviews. A recruiter can tell you a lot about the role, but only the founder can tell you what your shares could be worth and how likely they are to pay out. A founder who’s confident in the business should be happy to answer questions like these:
- When do my shares start to vest, and is there a cliff?
- What percentage of the fully diluted company is this? That means counting every share and option, including ones set aside for future hires.
- If the company sold, how much would investors get paid before employees?
- How long would I have to buy my options if I left?
- What are my shares worth in your best case, your expected case and your worst case?
- How many months of runway do you have, and is this role paid for by a customer contract or by the next round?
- Have any employees been able to sell shares yet?
If a founder can’t answer these clearly, take note. One candidate we’ve worked with came to us after they relocated for an early-stage company that folded only months later. Our guide to how to tell if a space startup is a safe move covers the other signs to check before you sign.
Space Startup Equity: Ask for the Numbers First
A big percentage and a big IPO target sound great in a pitch. But don’t forget that what you keep depends on the terms of the grant and on whether the company even gets there.
Before you weigh the shares, make sure the salary can support you and anyone who relies on you. Our guide to weighing startup equity against salary shows you how to work that out. And if you’re thinking about your next move, take a look at the space roles we’re hiring for right now.
This blog is general information, not financial or tax advice. Everyone’s situation is different, so talk to a qualified financial advisor before you make decisions about equity.