If I were a C-level in a startup, I’d shy away from buying lower level employee shares as I wouldn’t want the frustration, jealousy, or other negative feelings if the company achieves a strong IPO or other exit.
If the company fails to achieve a good exit, I don’t need any more exposure. It’s almost a lose-lose.
Honestly that's a red flag for the company itself if senior management is not willing to buy more shares whenever possible.
Reducing your exposure in the company is an employee mindset, not an entrepreneur one.
One of the very first question potential clients ask us, is "how much is the management committed?", and by that they mean, how much of their own money did they have invested in the company.
This seems like a really odd take to me. Senior management at a startup with illiquid shares is going to buy those employees' options with what? Do you imagine the CEO digging into the ol' pocket for $200k to cover an early employee's appreciated equity?
Much more of a red flag if the CEO has that kind of cash sitting around from taking something off the table early.
A lot of companies want employees to own a part of the pie so they'll feel personally engaged in the future of the company. I don't think it's a red flag at all.
Most companies will set away 5-10% of their stock value to be owned by employees. The only reason they'd buy it back from you is to give it to others.
If the company fails to achieve a good exit, I don’t need any more exposure. It’s almost a lose-lose.