What is a fair strike price for early-stage startup equity?

Strike price should match the company's 409A valuation (IRS-approved valuation for tax purposes). If strike price is much higher than valuation, options become worthless. If lower, you're getting a tax-advantaged deal. Ask the company for the current 409A.

Why does dilution matter?

If you own 1% of a startup and the company raises funding with new shares, your percentage gets diluted. If dilution happens multiple times, 1% becomes 0.5%, then 0.25%. Your options can become worthless even if the company grows.

What makes early-stage startup equity worth anything?

Startup equity is only worth money if the company succeeds (raises funds, grows, gets acquired). Most startups fail. Negotiate for: (1) acceleration on M&A, (2) fair strike price, (3) no clawback, (4) extended exercise window after exit.

What is a fair strike price for early-stage startup equity?

Strike price should match the company's 409A valuation (IRS-approved valuation for tax purposes). If strike price is much higher than valuation, options become worthless. If lower, you're getting a tax-advantaged deal. Ask the company for the current 409A.

Why does dilution matter?

If you own 1% of a startup and the company raises funding with new shares, your percentage gets diluted. If dilution happens multiple times, 1% becomes 0.5%, then 0.25%. Your options can become worthless even if the company grows.

What makes early-stage startup equity worth anything?

Startup equity is only worth money if the company succeeds (raises funds, grows, gets acquired). Most startups fail. Negotiate for: (1) acceleration on M&A, (2) fair strike price, (3) no clawback, (4) extended exercise window after exit.

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Early Stage Startup Stock Option Grant — Evaluate Your Startup Equity

Early-stage startup equity is high-risk/high-reward. Your grant agreement sets critical terms: strike price (how much you pay to exercise), vesting schedule, and acceleration. A bad strike price can make your options worthless. No acceleration clauses can leave you with nothing in an exit. Our AI helps you evaluate the real value of your startup equity and spot deal-breaker terms.

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What Our AI Covers

Strike price reasonableness (409A valuation check)
Dilution risk from future funding rounds
Vesting schedule and cliff analysis
Acceleration clause detection and strength
Common stock vs preferred stock comparison
Exit scenario equity value projection

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Early Stage Startup Stock Option Grant — Frequently Asked Questions

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