Can you provide a few scenarios? I imagine other HN readers are curious too, especially given our(collective) lack of experience with IPO's....well at least mine.
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.
No, I'm not on the team.
The other reason is liquidity. Sometimes you want money now, not in a few years. Maybe you need to buy a house, or you want to start your own business (and thus not have a salary income for the next two years or more), or you or your spouse are pregnant, or you just decided you have to have a new Model S.
While there is some truth to this, there is also this: https://en.wikipedia.org/wiki/The_Market_for_Lemons
Basically, the risk is that people most likely to want to sell are those with some suspicion that there is a problem, buyers are therefore suspicious and demand a discount, this in turn drives out people with stock in good companies since they don't want to sell at a big discount, and the market collapses...
If 90% of your wealth exists only in the theoretical value of your pre-IPO stock, that's not a good balanced portfolio.
Why would this be true? If desperate, I'm willing to work for any (non-evil) company I believe can pay me what they owe. The product can be absolute garbage that'll never sell, that's not really my problem. It would obviously impact my valuation any stock options, but that's another story.
(I'm happy to work at a place I do believe in - although I'm still glad they pay cash and not stock).