I would revise #1 as a gamble as opposed to an investment(company has no revenues and or product for sale, therefore it can't be an investment).. These people buying restricted shares believe management's sales pitch that the shares will be worth more than they purchased them at, by the time they are able to sell them post restriction. I personally have been pursued to purchase shares at a big discount to help fund the downward cycle. I can say most people who do this believe the story, but then end up losing the investment or a portion of it.