

Ask HN: being offered stocks, how to estimate value? - hippich

I am consulting local start up on some specific technical issues. I am charging quite a lot to do more work on this start up, so I was offered stocks as a part of payment. But I have no idea how to evaluate this offer. Any tips on what I should look for and what I should base my numbers on?
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jfb
Is the company publicly traded?

YES: Google can tell you; NO: $0.

If you get equity from a startup, your expected value is nil, or near enough
to be without distinction. Either the equity is utterly dilute, or the
founders are incompetent. Neither case looks like getting paid to me.

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johnrob
Ask how long it will take them to actually get you your stock certificate,
should you accept. Doing anything stock related with a startup is can of worms
- things always get delayed due to board meetings, valuations, fund raising,
etc. These things all leave the door open to you, one way or another, not
getting your stock. I'd definitely ask them about this. The answer will give
you a preview of what the process of collecting your stock will be like.

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eduardordm
Two answers, first, the cynical:

Keep in mind that equity reflects possibilites, specially in startups. I would
say that most of the value of a startup are just changes of succeeding. Read:
How much does a lottery ticket is valued?

Second, more useful:

You need choose a target P/E ration, and calculate. PE == Share_value /
Earnings_per_share.

30 is a reasonable target. The problem is, in tech you can get P/Es around
200-300 (which is stupid).

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lukesandberg
You should really try to get cash if you can. The value of any stock the give
you will be highly volatile and very illiquid. The only way you could try to
value the equity would be to look at what other investors paid for their
equity, also you could try to actually look at their books.

But really, there is no reasonable way for you to value their offer. I would
take cash and possibly offer a payment plan instead.

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jacobian
I'm a consultant as well. I never take stock or equity as payment; cash only.
Look at it this way: if the company's so cash-poor that they can't afford to
pay for work, what are the odds their stock/equity will ever be worth
anything?

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pg
This argument is valid except in a few exceptions, but the exceptions are so
extreme that they make it dangerous to generalize.

[http://www.nytimes.com/2012/02/02/technology/for-founders-
to...](http://www.nytimes.com/2012/02/02/technology/for-founders-to-
decorators-facebook-riches.html?pagewanted=all&_r=0)

~~~
ivankirigin
It might be easier to generalize by kind of work. Unpaid engineers is a very
bad sign.

