Comparing pre-ipo to public company stock?
Mar 4, 2016
17 Comments
What's the best way to think of a pre-ipo to a public company RSU offer?
Say G is offering 750k of RSU, what is a good equivalent for A list pre-ipo companies (Airbnb, uber, Pinterest, Slack)?
How should one think of it? What multiple should be considered?
comments
AirBnB: Pretty solid business model and on the mature side of the unicorns. Haven't followed their growth lately but I don't think there will be surprises here. Maybe the safest bet of the 3 but also the least growth upside.
Uber: Big question mark in my opinion. Con: Growth strategy is a race to the bottom, pricing-wise. Pro: They're winning in many markets and there's a network effect. They're burning through lots of cash. I don't think the other businesses will be as big (eg ubereats). Then again, when I first heard about them I was skeptical and they've proven to be quite something since then. I think Uber has limited upside from here as wel.
They're recruiting hard and seem to be growing substantially.
So, for example, if you think there's a 50% chance of liquidation, then factor risk at 2x. If you could get 500k from a public company, then that would be translate to 1M at a pre-ipo one.
The difficulty is that the younger the company is, the harder it is to guess that probability with any success. Also, it's harder to predict the potential value of a young company.