If the company builds valuable assets or generates a lot of cash, then equity is valuable. The company might be able to "get bought out or go public" as a result, but if not you still have a claim on future cashflow and company assets. Most companies don't go public but many of those do pay dividends to equity holders.
Anyway my only real advice is to find out how the founders are compensating themselves. That will tell you a lot about where they think value creation and capture will accrue in the long run.
The big question is if they are offering equity to others. Because if they do, you can be sure that that is the asset to own when things go well.
This is actually a problem with equity based blockchain token investments. The premise of a proper token structure is to create some kind of long term value that is tied to the economic success of the company. If you have both tokens and equity, the shareholders will try to maximize their return on investment, typically at the cost of the token value and the ecosystem it is supposed to benefit. There's a conflict of interest there that dooms many tokens before they get off the ground because ultimately their long term value is redirected to the share holders instead of the token holders.
On the other hand, if blockchains are going to eventually produce some unicorns, now would be the time to get involved. IMHO, we need to move beyond the current rather underwhelming state of the art that resembles the early dot com days in many ways. But then, the dot com bubble did produce plenty of successful startups in the end. IMHO it will take probably a decade or so before we'll know for sure whether there are business cases for some form of blockchain company to succeed.
Either way, insist on cash payments combined with something that may or may not be worth the gamble. That way you have something tangible.
On one hand, offering tokens is a great way to avoid the cost of trading stock on an exchange. OTOH startups are so very rarely publicly traded that it's moot. Also, the world of tokens is rife with scams and P&D nonsense. It would be very exceptional to find a token that's legitimate.
> what are the economics of how or why the price would actually rise?
If the company creates value (or even the perception of value), it may indeed rise. Of course, it's critical to determine the relationship between the Real Equity and these tokens. Right now the company has some amount of ownership represented by some kind of paper-trail "tokens." How will this be altered/diluted to issue the tokens? Will the tokens completely convert/supersede the existing equity representation?
It's probably moot, really, since so many tokens are scams.
> Does anyone know of any good resources on this kind of compensation?
You should consider this part of your compensation to be null -- like lottery tickets that are one-in-a-million shots.
How much more tokens/equity/RSU's would you buy if you were paid in all cash? If you could buy them at a discount, how much would you buy?
If you wouldn't buy thousands of dollars of this token if you were compensated completely in cash, you probably shouldn't take the tokens.
Writing this, I now realize that a company doesn't necessarily have to be public to give you RSUs.
Tokens for a good project are liquid immediately on numerous exchanges, and likely will be worth at least something. Don't neglect the time value of money.
That might not be a consideration at all if the company's chances of long term success isn't a part of your thesis for taking a job there. But why would you take a job at a company that you don't expect to be successful?
This is the equivalent of saying, "I have a great idea for a startup. I can't pay you or code, but if we make it big, you'll be rich!"
For most people, the only way to buy equity (lottery tickets) in a private company is to work at one and negotiate for equity compensation.
Tokens are somewhat different I suppose if they are actually listed and tradable right away. That solves the access problem.
But besides access there are also often price discounts granted to employees for both tokens and equity forms of lottery tickets.
So I guess I would say it's not always the right thing to optimize for, but in general working at a company you really believe in can get you access to some very rare lottery tickets.
I'm assuming you're getting cash compensation too, but consider carefully the comparison.
As other commenters say, most ICO nowadays are scams and risky business as well when it comes to regulations.
I would be very very very careful here.
But then, the chances that they get some value VS the chances that some other startup's equity gets some value might be higher.
compensation != equity
You might get lucky and they might have some value in the future, but most likely they'll never be worth anything.
Get the job if you think it's going to be interesting and if you're happy with the cash compensation, not for the lottery tickets you're getting.
View it as a perk, like receiving a free lottery ticket, but don't allow that to factor into your "real" compensation.
That would make them uncomfortably close to a security, which is categorically not a good thing unless handled very carefully.
Most investors today see tokens as a bonus, but invest in equity.
While I don’t agree with them necessarily, I’d certainly value crypto-tokens at zero. Or maybe a nickel...
Tokens can on the other hand have value even if none the above happens, and you get a liquid market much earlier. If the monetary policy of the token is reasonable, and the market cap shoots up for one reason or another in the future, you'd make a big buck.
But would you make any money on your equity of the market cap of the token would go up? Not necessarily.
