[DesertCat]

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A) Keep the share and get $2,000 this year and $3,000 next year.
B) Take the $10,000 and try to get $5,000 return in 2 years.

Where are you going to put that $10,000 where it can work harder for you than keeping it in choice A?

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I disagree with this (a little). A bird in hand is sometimes worth two in the bush, when the bird in hand is liquid and the two in the bush are, er, illiquid.

I've worked at several high tech startups. Whenever an employee had a chance to sell small fraction of their shares at a decent price and asked my opinion, I always recommended selling.

I'd say, if you sell 10% today, and your other 90% turn out to be worth $1M, you won't kill yourself because you didn't get $1.1M. But if the shares end up worthless, you'll be awfully glad you got something out of it when you could.

In this case, if the company is successful, and each 1% makes $5k over the next two years, that's $40k he'll make by holding. If he sells 1%, and invests it in CD's (making a grand in interest), he's reduced his best case income to $36k over those two years.

But his worst case scenario is much better. If the company goes out of business, he's got $10.5k instead of zero.

It all depends upon how much risk he sees. Not just going out of business risk, but underperforming risk so that the annual dividends are much lower than his present forecast.