I think this misses it a little bit. While it certainly is a problem to have a large $ value on stock that you can’t sell yet, it is a nice problem to have.
The real risk with joining a startup is that it might very likely NEVER be worth much at all. Whereas at a mature or public company, you can have some confidence that at least your stock is worth something today.
Of faang gives me $100k in stock, that’s real money I can put in my pocket. When a startup offers me 100k shares, it’s likely that having a chance to sell them doesn’t matter, because they aren’t worth selling. Of course, it can certainly go the other way and make me rich too. Hence the risk.
It’s not always a nice problem to have. Before a change in tax policy under Trump it was possible to have taxes due on some of the gains the stock had made before you were able to sell it. At least with this type of liquidity program you could cash in enough options to pay the taxman rather than forfeit all your options to avoid taxes.
Comments
I think this misses it a little bit. While it certainly is a problem to have a large $ value on stock that you can’t sell yet, it is a nice problem to have.
The real risk with joining a startup is that it might very likely NEVER be worth much at all. Whereas at a mature or public company, you can have some confidence that at least your stock is worth something today.
Of faang gives me $100k in stock, that’s real money I can put in my pocket. When a startup offers me 100k shares, it’s likely that having a chance to sell them doesn’t matter, because they aren’t worth selling. Of course, it can certainly go the other way and make me rich too. Hence the risk.
It’s not always a nice problem to have. Before a change in tax policy under Trump it was possible to have taxes due on some of the gains the stock had made before you were able to sell it. At least with this type of liquidity program you could cash in enough options to pay the taxman rather than forfeit all your options to avoid taxes.