4 ms·

Is this really considered obscure? I'm pretty sure I read about it in a Nolo book on small business. Anyway, be aware this applies to shareholders. Having an

• ganeumann 10y ago
  It's not obscure. It's pretty well understood by financial markets players, including VCs. I think it's probably not well known by startup employees because it's an issue they've almost certainly never been faced with.
• jerf 10y ago
  While many people may not be able to swing exercising all their shares or a generally-meaningful number of shares, you can exercise one. As I type this I find myself wondering if it's not a bad idea to do in general, so that you move from "options holder" to "stockholder". Comments from those with experience?
  • mcherm 10y ago
    Hmm... I exercised some of my shares in a startup I was part of, solely for the sake of becoming a "stockholder" rather than just an options holder. I felt good about being a stockholder. I did not get any enhanced access to information about the company (for several reasons, among them that they were pretty open anyhow and I didn't ask). Company later closed down. Investors with classes of shares that were guaranteed more than 1x return on their investment took all the value and common stockholders got nothing. So, obviously, I lost money by exercising my options. So I suppose I got "feeling good about being a stockholder" for the cost of what I paid for the options. And honestly, looking back on it I'm comfortable with that. I wish the company had succeeded, but I'm glad I was part of it even if it didn't, and what it cost me was not more than I could afford.