HACKER Q&A
📣 askhelpthrow

Am I getting fair market value for my early shares


Throwaway for obvious reasons.

4 Years ago, I invested in a startup, early phase, nothing crazy. They're getting ready to do their series A, and there are a bunch of SAFES + whatnot in the way.

Someone offered me a 50% premium over my original share price - and I only have to sell half my shares. This means that I'd receive my base back, a 50% return on tope- and could let the remaining 50% ride.

Thing is.. I have no way of valuing these things. An IPO definitely is not in the future for this company. They're at best a buyout target.

So HN... would it be crazy for me to do this? Is this brilliant? I need hivemind help here - because I honestly have no clue.

  👤 decodr1 Accepted Answer ✓
Wait until they price the Series A and sell for 20-30% discount to that
👤 orbz
It’s really going to depend on your tolerance for risk and if you need some immediate money. Also might depend on your current tax situation. If you really believe in the company then you could probably let it ride at least another round.
👤 gargablegar
Seems like you broke even and then some - let the rest ride. Unless you really need money but it sounds like you happy with the break even.

It really depends on your time line from here - after series A things will go well or could start slipping. So you need to think about it. If it’s a small series A there is more chance of another round sooner - if it’s a massive series a then maybe others have solid belief in this company and you should let it ride for sure.

👤 uberman
If they are a buyout target, there is a distinct possibility that there are going to preferred VC positions ahead of you to cover that could mean you get nothing. It is not uncommon to find common owners get nothing in a buyout.

Do you know anything about the positions ahead of you or what they might realistically expect/accept? I certainly had no clue the first time I was in this situation, and in the end my shares cost me money as come acquisition time they had 0 value.

Just a heads up.