VC money has dried up faster than your Thanksgiving turkey without basting, but startups still need to hire. The result? A compensation creativity contest that would make your accountant cry and your lawyer nervous.

The New Equity Playbook

Carta's Q3 2025 Equity Report shows that bootstrapped companies are offering equity packages 2-3x larger than their VC-backed counterparts. When you can't compete on salary, you compensate with ownership. Problem is, that ownership might be worth zero or might be worth millions. It's basically scratch-off tickets with extra steps.

AngelList data reveals that bootstrapped startups raised their median equity grants by 47% year-over-year. A senior engineer at a Series A company might get 0.1% equity. That same engineer at a bootstrapped startup? They're seeing 0.5-1.0% offers. The catch: one has $20M in the bank, the other is profitable on $2M revenue and no margin for error.

The Wild Stuff Companies Are Trying

Profit-sharing agreements are making a comeback. Instead of traditional equity, some startups offer percentage points of net profit. ProfitWell's compensation research found that 23% of bootstrapped B2B SaaS companies now include profit-sharing in senior leadership packages. You don't own the company, but you get a cut of actual money if there IS actual money.

Vesting acceleration based on revenue milestones is getting creative. Hit $10M ARR? Your four-year vest becomes a three-year vest. One startup I talked to (anonymously, because their lawyers would murder me) offered to fully vest a VP of Sales immediately if they hit $5M in new bookings. High risk, high reward, probably questionable from an accounting perspective.

Equity + debt hybrid packages are emerging for executive roles. SaaStr's compensation survey highlighted cases where bootstrapped companies offer smaller equity stakes plus promissory notes that pay out when the company hits profitability or exits. You get guaranteed money eventually (maybe) plus upside (possibly).

Why This Actually Works Sometimes

Here's the thing: some candidates WANT this. First Round Capital's State of Startups report shows that 34% of startup employees prefer larger equity at bootstrapped companies over smaller equity at heavily-funded ones. The logic: less dilution, more control, and if it works, the payout is bigger.

Bootstrapped companies that reach exit typically have fewer funding rounds, meaning early employees own more of the company at acquisition. TechCrunch's exit data shows that median employee equity value at bootstrapped exits was $340K versus $180K at VC-backed exits (for employees joining at similar stages).

The risk tolerance matters. A 28-year-old engineer with no dependents and a high risk tolerance might gladly take $100K salary + 1% equity at a bootstrapped startup over $180K + 0.05% at a growth-stage company. A 45-year-old with two kids in college is taking the cash, thanks.

The Uncomfortable Math

Most startups fail. Bootstrapped or funded, the odds aren't great. Startup Genome's failure analysis puts five-year survival rates around 10% for venture-backed startups, and roughly the same for bootstrapped ones (data is murkier because they're not tracked as closely).

So you're taking bigger equity packages in companies with the same failure rates but less runway and margin for error. That's not a criticism, it's just math. The upside is real, but so is the risk of your equity being worth exactly zero dollars.

Smart candidates are asking the right questions: What's the burn rate? When's profitability? What's the revenue trajectory? Who are the customers, and are they paying? These aren't rude questions, they're basic due diligence when someone's offering you lottery tickets instead of cash.

What Recruiters Need to Know

If you're recruiting for bootstrapped startups, stop pretending the equity is equivalent to cash. It's not. Be honest about the risk-reward profile, show candidates the cap table, and let them make informed decisions.

The candidates who want this deal are out there. They're just not the same candidates who want Google-level comp packages. Stop trying to recruit from different talent pools and you'll stop getting ghosted.

And hey, if you're a candidate considering one of these offers? Talk to a lawyer, run the numbers, and make sure you believe in the product. Because you're not getting paid market rate in cash, you're getting paid in potential. Make sure the potential is real.

Happy Thanksgiving, and may your equity grants vest before the company implodes.