409A valuation calculator.

Estimate the fair market value of your startup's common stock before commissioning a formal 409A. Useful for option grants, hiring plans, and modelling how a round shifts FMV.

Why estimate your 409A before paying for one.

⚠️ This is an estimate for planning only. Official 409A valuations must be performed by IRS-approved, independent appraisers. Not tax, legal, or financial advice.

  1. 01
    Plan equity grants.Set option strike prices before paying for a formal 409A — useful for early hires and founder grants.
  2. 02
    Model funding rounds.See how a new round shifts common stock FMV before committing to terms.
  3. 03
    Budget for the real report.Formal 409A valuations cost $3,000–$10,000. Estimate first, then commission with a clear sense of the answer.
  4. 04
    Avoid IRS penalties.Options granted below FMV trigger immediate tax + 20% penalty. A baseline estimate keeps you in the ballpark.

Calculate your 409A estimate.

Most recent priced round (determines common stock discount).

Post-money valuation from your most recent round. Leave blank if pre-funding.

ARR or annual revenue. Optional context for valuation method selection.

Common + preferred + option pool. Early-stage startups typically have 10–20M shares.

Required only for pre-funding companies (asset-approach valuation).

Required only if using the asset approach.

What is a 409A valuation?

The strike price for your options.

A 409A valuation is an independent appraisal of a private company's common stock FMV. It sets the strike price for employee stock options — and protects everyone from IRS penalties when options are granted at or above FMV.

Initial valuationBefore first option grants
Refresh cadenceEvery 12 months
Material event refreshWithin 30–60 days
Typical report cost$3,000–$10,000

Material events that trigger a new valuation.

  1. 01
    New funding round (Series A, B, C, etc.)
  2. 02
    Significant revenue milestone achieved
  3. 03
    Major product launch or market expansion
  4. 04
    Acquisition of another company
  5. 05
    Change in competitive landscape
  6. 06
    Hiring of key executives
  7. 07
    Loss of major customer or contract
  8. 08
    Significant change in financial performance

The three valuation methods.

  1. 01
    Market approach.Last preferred round × (1 − common stock discount). Most common for venture-backed startups.
  2. 02
    Asset approach.Total assets − total liabilities. Used for pre-revenue companies with no recent round.
  3. 03
    Income approach (DCF).Discounted future cash flows. Rarely used early-stage due to forecast uncertainty.

Common stock discount by stage.

Common stock is worth less than preferred — no liquidation preference, no anti-dilution, no board seat. The discount narrows as the company matures and exit probability rises.

Pre-seed / Seed30–40%
Series A20–30%
Series B10–20%
Series C+10–20%

IRS safe harbor & non-compliance.

Safe harbor protection.

A proper 409A flips the IRS burden of proof. Without it, your company has to defend the valuation; with it, the IRS must prove it's “grossly unreasonable” — a high bar.

Performed byQualified independent appraiser
MethodologyMarket / Income / Asset
DocumentationWritten valuation report
Validity12 months or material event

Consequences of getting it wrong.

  1. 01
    Immediate taxation on stock options at grant (not exercise)
  2. 02
    20% penalty tax on top of ordinary income tax
  3. 03
    Interest charges on underpayment
  4. 04
    Loss of preferential ISO (Incentive Stock Option) treatment
  5. 05
    Potential IRS audit of all equity compensation
  6. 06
    Employee lawsuits for improper stock option grants

These penalties hit at grant, not at exercise. An employee could owe more in tax than they have in net worth — on options they haven't even exercised.

Common 409A mistakes.

  1. 01
    Issuing options before obtaining a 409A valuation.
  2. 02
    Using a valuation older than 12 months.
  3. 03
    Skipping a refresh after a material event (new round, acquisition offer, big revenue milestone).
  4. 04
    DIY valuations without a qualified appraiser — no safe harbor protection.
  5. 05
    Undervaluing stock to lower strike prices — invites IRS scrutiny.
  6. 06
    Missing board approval on the valuation.

More startup calculators.

  1. SAFE Calculator

    Model SAFE valuation, conversion, and dilution — see how your SAFE converts at a priced round.

  2. Convertible Note Calculator

    Calculate convertible note conversion, interest accrual, and dilution at your next round.

  3. Startup Valuation Calculator

    Calculate your startup’s pre-money valuation using the Scorecard Method.

  4. Equity Vesting Calculator

    Calculate vesting schedules and track equity over time with cliff periods.

  5. Co-founder Equity Split Calculator

    Fairly divide equity between co-founders based on contribution and commitment.

  6. Cap Table Calculator

    Model ownership dilution across multiple funding rounds.

Building a startup that needs a 409A?

If you're thinking about option grants and 409A timing, your product needs to be built to last. I build startup web applications in Next.js and TypeScript with the architecture to scale from seed to Series A.

Email me

Built by Taro Schenker — full-stack developer who works with startups and local businesses.