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The kicker here is usually the tax liability depending on your jurisdiction. Would you be looking at a large tax bill in addition to the cost of the options?

• beagle3 16y ago
  This. The US tax laws in this respect are retarded; you have to pay taxes at the moment you exercise your options, regardless of whether you can resell them or not. In the previous bubble, it happened that people exercised options that made them tax liable for e.g. $1M (because e.g. an IPO made it worth $5M), but had a lockup of 6-months, which is quite common, and at the end of the lockup period, their stocks were worth less than $1M. In some other countries, you only pay taxes when you actually see money. That makes a lot more sense. And, Israel is now considering a new tax law which says an investment into a "startup" (whatever that means) is immediately considered a capital loss. Then, if it makes money, you have capital gain. for large-capital-base angels, it makes cash flow simpler, -- and in fact, if they elect to use it, they'll pay more taxes on their successes at the end. for small-time angels making one or two investments a year, it is a huge difference in cashflow. for the state, it doesn't matter in the long run, because it just gets the capital lost written down sooner than later.