That assumes that the company reaches the IPO and its value holds. And still I don't get how lower they must be priced to be comparable to a growing startup, ev

That assumes that the company reaches the IPO and its value holds. And still I don't get how lower they must be priced to be comparable to a growing startup, even risk adjusted. (And consider that the IRS could have something to say...) If the company doesn't reach the IPO and get acquired, well check what liquidation preference means. Check this post to understand better how stocks in a startup works: http://heidiroizen.tumblr.com/post/118473647305/how-to-build-a-unicorn-from-scratch-and-walk http://heidiroizen.tumblr.com/post/118473647305/how-to-build... (it is focused on founders, but employee get the same treatment).