[myrandomcomment]

If you have a few $m in the bank, go for it. It's a loss you can write off on your taxes. Otherwise run away. If they are laying off and desperate to raise funding the next round will dilute your % so much to be worthless. I am on my, hum, 6th startup, making millions on one, 3 crashing and waiting / zombie on 2 others. It is all a risk game, easier to play if you already have the buy in stake. If you do not, do not bet the pot on a suite pair in the hole.

[spookthesunset]

> It's a loss you can write off on your taxes

Investment loses aren't tax credits. You don't magically get all the money back. You'll only "get back" whatever your marginal tax rate is. You'll still be out the remainder of the cash you forked over.

[myrandomcomment]

Losses from investments may be used as tax deductions if the conditions in the tax law are met.

[spookthesunset]

Tax deductions aren’t tax credits. Investment losses are deductions not credits. It is a huge difference.

“Writing off” a investment loss only reduced your bill by the marginal tax rate of your loss. If it was a credit, you’d be marking down the tax bill by the entire amount of the loss, which isn’t what happens for investments.

To many people think that something being deductible makes it “free”. No. They basically give you a discount for the item equal to your marginal tax rate.

Note: I am not a CPA. Please see one before doing your tax if you are confusing credits and deductions.

[myrandomcomment]

My quote was from a document prepared by a CPA. I agree with what you said - you need to check, but in most cases, someone in the Bay Area making the typical pay can write off a loss from a startup over a period of a few year. Your milage might vary.