Why Trusting Your Gut Is the Fastest Way to Set Your Equity on Fire!

There’s a time and place for emotion at work, well maybe not at a Coldplay concert with you head of HR, which just might be the fastest way of setting your equity and maybe your life on fire. ...But using emotion to make investment decisions—especially around private startup equity—is one of the most reliable ways to burn your financial future.

The Cult of the Gut

Startup culture loves to glorify “trusting your gut.” We admire founders whofollowed their instinctand built billion-dollar companies. But for every Steve Jobs, there are thousands of startup employees making gut calls like:

• “This companyfeelslike a winner. I should exercise all my options.”
• “I believe in our mission. I’ll pour my savings into buying stock before I leave.”
• “It’d feel wrong to walk away from the equity—I’ve given this place 6 years!”

That’s not investing. That’s nostalgia mixed with fear and served over a steaming plate of irrationality.

Emotion is a bad CFO

Emotion Is a Terrible CFO

Let’s be clear: emotion has its uses. It helps us bond, leads us to passion, and makes us human. But when it comes to decisions about private equity—emotion is the worst decision-making tool in your arsenal.

And the data agrees.

• Nobel laureate Daniel Kahneman’s work shows we’re hardwired forsystematic bias—loss aversion, overconfidence, anchoring—all of which cloud logic and lead to financial mistakes.
• According to Dalbar’s 2020 report, the average investor underperforms the market by nearly3% per year, not because of bad investments, but because ofbad timing driven by emotion.
• A 2017 study in theJournal of Financial Economicsfound that startup employees regularlyoverestimate the value of their options, primarily because of emotional attachment and poor understanding of liquidation preferences, tax impact, and dilution.

The Emotional Startup Exit Checklist (aka How to Get Wrecked)

Let’s say you’re leaving your startup job. Here’s what emotion might tell you:

✅ “I can’t justleavemy equity. That’s mybaby!”

✅ “I’d hate to miss out if we IPO.”

✅ “Everyone says we’re the next Figma.”

✅ “It justfeels rightto exercise…”

Meanwhile, logic is over in the corner shouting:

❌ “Do you understand the liquidation preferences?”

❌ “What are tax consequences of this?”

❌ “Do you know how many more rounds the company will raise before exit?”

❌ “Can you actuallysellthese shares in the next 5 years?”

And your gut is like, “Nah bro, we’re going with vibes.”

Stop Romanticizing Your Cap Table

It’s shockingly easy to conflate love for your work with the assumption that your equity is worth something. But equity is not a medal. It’s not gratitude. It’s not a vibe. It’s a risky financial instrument with zero liquidity, high uncertainty, and more layers of complexity than a Delaware C-corp board doc.

"If you wouldn’t buy into a random startup with your own post-tax cash, why would you do it just because you used to work there?"

The Fix: Boring Is Brilliant

Here’s what actual smart equity decision-making looks like:

• Get a real valuation model, factoring in preferences, dilution, timelines.
• Don’t go it alone—talk to someone who knows venture math, not just startup lore.
• Consider alternativeslike option financing or equity pooling like Aption to protect downside and reduce concentration.
• Ask yourself: If I weren’t emotionally involved, would I still make this decision?

And if your gut says one thing, but your spreadsheet says another?Side with the spreadsheet. Every time.

Final Thought

Your gut is great for love (excluding an affair with the VP of HR), music, and figuring out if the sushi's off. But your startup equity? That’s a chess game, not a drum circle.

So before you throw your life savings at a job you’ve just left because it “feels like the right thing to do,”remember: Emotion is the HR concert hookup of investment strategies.

Fun in the moment. But probably a terrible idea.

References:

• Kahneman, D. (2011).Thinking, Fast and Slow.
• Dalbar Inc. (2020).Quantitative Analysis of Investor Behavior.
• Journal of Financial Economics (2017). "How do employees value stock options?"https://doi.org/10.1016/j.jfineco.2017.06.003
• Astronomer board conflict: TechCrunch

This article is for educational purposes only and does not constitute financial, legal, or tax advice. Please consult with qualified professionals before making equity-related decisions.

Aption provides financing solutions and advisory services for employees of venture-backed companies. Learn more about our equity financing optionsaption.com.