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Almost all startups go to zero, meaning every cent what VCs paid for stock, at any price, did not end up being worth more than they paid.
by tyre 1y ago
Almost all startups go to zero, meaning every cent what VCs paid for stock, at any price, did not end up being worth more than they paid.
- nachox999 1y agoSure, what I'm getting at is that in your hands, or in the buyer's, the value can go to zero or multiply. If they buy, it's because they assess that the chances of it multiplying are greater than it going to zero. Why sell in that case?
- realslimjd 1y agoThe buyer is not assessing that way. The buyer has a diverse portfolio where they only need 10-20% of their bets to succeed. The math is not in your favor as an employee.
- dkural 1y agoYou're selling only 10%, you still get to see the other 90% go up in value, but that 10% you sold protects you from a wipe-out.
- jaggederest 1y agoYour intuition is wrong here. Check out the Kelly criterion and do a little math - by my math, when you have modest personal assets <$1m, if you expect a 200x return from today, and you think there's a 1% chance that'll happen, you should sell 99% of your current stock and only hold the 1%. This maximizes the preservation of your net wealth. VCs have MUCH larger bankrolls and so their Kelly bet is proportionately larger, but not percentage larger.