[rahimnathwani]

Imagine your net worth consists of 100k cash, and a lottery ticket which, by your reckoning, has 15% chance of being worth 1m, and an 85% chance of being worth zero. Imagine further that you won't know the outcome until 3-5 years from now.

Let's forget the time value of money for a moment. The expected value (mean value under all possible future scenarios) is 15% x 1m, i.e. 150k. This is more than half your net worth.

Wouldn't you give an investor a discount if he agrees to buy half of the lottery ticket? It would get rid of the 85% chance that you lose over half your net worth through an outcome over which you have only limited influence.

Also, you can buy stuff with cash. Today.

[gargarplex]

Plus, you might not even have enough cash to exercise your options before they expire.

[kumarski]

I see. That makes sense. Well put. Are you on the team?

[rahimnathwani]

Thanks.

No, I'm not on the team.