Gather Critical Equity Information

Understand what type of equity you own: ISOs, NSOs, or RSUs Know your strike price, vesting schedule, and post-termination exercise window Learn the latest 409A valuation and preferred price per share Talk to your manager for important insights and proactive guidance

Assess Business Health Factors

Evaluate current business metrics, profitability, and overall company performance Understand the company's liquidity plan and potential IPO timeline Research public market comparables to gauge realistic valuations Assess whether you believe in the leadership team's ability

Analyze Multiple Valuation Scenarios

Compare preferred price, 409A valuation, and secondary market trading values Consider how lower valuations may impact your financial goals Understand that lower 409A valuations reduce taxable obligations when exercising Remember secondary markets are inefficient but provide valuation insights

Exercise Options Strategic Considerations

Lower bargain element may create tax-optimal timing for exercising options Only exercise if you believe valuation will exceed strike price plus taxes Remember startup equity is risky and often correlated to net worth Consider additional upside negotiations as you prove business value

Alternative Career Path Options

If you don't believe in company future, consider finding new employment Now may be optimal time to start new company or find stable job Avoid selling shares on secondary market due to lack of demand Decision depends on your personal risk tolerance and priorities

Collect complete equity and business health data before making any decisions Write a decision memo to yourself to minimize regret and clarify motives Consider exercising options during lower 409A valuations for tax optimization Focus on long-term career building rather than short-term equity concerns

What to Do at an Overvalued Startup

Rubric Advisors

Curated by: Rubric Advisors

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Stay Calm and Intentional

Remember that startups are a long-term game requiring decades to flourish
Great businesses take time to develop, so avoid making rash decisions
Down markets can be opportunities to differentiate yourself and build skills
Focus on working with conviction on something you believe in

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Growth Visualizer Risk Assessment

Stay Calm and Intentional

Gather Critical Equity Information

Assess Business Health Factors

Analyze Multiple Valuation Scenarios

Exercise Options Strategic Considerations

Alternative Career Path Options

Key Takeaways

Related Topics

Should You Early Exercise Your Stock Options?

A Framework for Exercising Stock Options

Early Exercising and 83(b) Elections

Stay Calm and Intentional

Gather Critical Equity Information

Assess Business Health Factors

Analyze Multiple Valuation Scenarios

Exercise Options Strategic Considerations

Alternative Career Path Options

Key Takeaways

Related Topics

Should You Early Exercise Your Stock Options?

A Framework for Exercising Stock Options

Early Exercising and 83(b) Elections