In the startup world right now, there's a lot of evidence of a bubble in privately funded companies, but less of one in the public markets. But there are two differences between now and the
- most companies have real cash flows this time
- investors are smarter
As valuations have gone up, investors have started transferring risk back to the founders and employees with things like liquidation preferences. What that means is that if you take funding at some ridiculous valuation, you'll need to exit at an even higher valuation to actually make money as a founder or employee. But there doesn't seem to be the same appetite for these high valuations in the public markets right now.
The upshot is this: take more cash than options right now. There's a good chance your options will be worthless at this point. If you want equity, ask for actual shares instead.
As for worst cases, you'll likely see weaker companies fail and stronger companies reduce headcount to better manage costs.