Are there any rules of thumb for how to compare options in a pre-IPO startup to real money or shares in publicly traded companies? I'm just wondering how to compare them, or if there's some rule that factors in strike price and option quantity to get a number that can be used to compare. Thanks.
Negative value even, that tax implication tho
Agree with Luke. The value is 0. But if you want to pretend, then the value is (# options / total shares) * (exit value - vc funding raised) - (# of options * strike price) The huge variables are what will the exit value be and what are the total shares - both of these values will move greatly over time which is why you can't value options accurately until you are close to the exit event when those numbers get fixed.
Formula is (price per share - strike price) x number of options. This applies no matter what. You can then apply your own coefficient for valuing pre-IPO companies to that number.
You forgot to multiply by one final variable. Odds it will ever IPO. ZERO
That's the coefficient I mentioned. Each companies odds are different so their coefficient will be different.
If it's not a unicorn(Uber, Lyft, Airbnb etc) - then all stock options are worthless.