Some people use Black Scholes to price options but that can be very hard, as there are two unknowns (volatility and if anyone has preferences over you). A few

Some people use Black Scholes to price options but that can be very hard, as there are two unknowns (volatility and if anyone has preferences over you). A few questions you can and should ask: 1 - What was the last valuation based on outside investors, and how long ago was it? 2 - How many preferences are in the cap table? (If a group of investors put in 100 million with a 2X liquidation preference then they are guaranteed to get 200 million before others get anything) 3 - Related to 2, ask at what exit value all shareholders get treated the same. 4 - Ask about how soon you would have to exercise upon leaving. (Frequently 90 days) 5 - See if the stock is trading in any secondary markets, or if there is news of public market investors remarking their shares. 6 - Ask about growth projections. (EBITDA for PE funded companies, Revenue for VC backed) 7 - Ask if future rounds will be needed. (If the business isn't close to cash flow positive and there are a lot of growth projected, this will take a lot of money) Net - there is a price the investors put per share on their stock. Yours should be at some discount to that. So if the investors value it at $1300 then you should come in less, much less. (And if it's too much less than the strike price, you are betting on a lot of growth)