Ask HN: Startup options and exercising
I am approaching my first full year at a startup and my options cliff for 25% of my options. Should I exercise that 25% immediately or let it sit? What are tax repercussions on exercising vs. not exercising?
There is hardly ever any valid reason to exercise your options before an IPO or similar equity event. There is a small tax benefit to exercise and hold them for at least 1 year, but there is HUGE risk in the value being wiped out or diluted.
There can be a small benefit in being an actual shareholder, as you are supposed to get minutes from the board meetings. But, you don't need to exercise all your options to do that, $1.00's worth would be enough.