It doesn’t matter if you think it is a unicorn or not, it is about risk management.
Early stage investors know that even the best startups have a fairly low chance of success, which is why they diversify by investing in a lot of them. The many failures are paid for by the few successes.
As an employee, you are only given stock in the one company you work for. Even if you think it will be a success, it isn’t smart to put all your eggs into that one basket. No investor would do that, and no employee should either.
If you are working at a startup, a lot of your eggs are already in that basket; your ongoing salary is dependent on the company continuing to succeed. If you take less cash for more equity, you are putting even more eggs into that same basket. If it fails, you are going to lose all the equity AND your salary.
You don’t want your investment risk and your salary risk to be that correlated.
Early stage investors know that even the best startups have a fairly low chance of success, which is why they diversify by investing in a lot of them. The many failures are paid for by the few successes.
As an employee, you are only given stock in the one company you work for. Even if you think it will be a success, it isn’t smart to put all your eggs into that one basket. No investor would do that, and no employee should either.
If you are working at a startup, a lot of your eggs are already in that basket; your ongoing salary is dependent on the company continuing to succeed. If you take less cash for more equity, you are putting even more eggs into that same basket. If it fails, you are going to lose all the equity AND your salary.
You don’t want your investment risk and your salary risk to be that correlated.