Executive Summary
Quick Answer
Is there a single formula for startup equity value?
Source: Corporate finance intuition
Quick Answer
What inputs matter most?
Source: Valuation practice (simplified)
Quick Answer
Where do tools help?
Source: Internal tools
Figure 1: Probability-weighted framing—inputs are judgment calls, not facts.
Step 1 — Normalize the Grant
| Question | Why it matters |
|---|---|
| Shares or options? | Options need exercise cost; RSUs deliver shares at vest |
| FD percentage? | Ask how FD is computed (pool included or not) |
| Vesting | Back-weighted value to vesting years |
Step 2 — Scenario Table (Example Structure)
| Scenario | Probability | Equity value to you (illustrative) |
|---|---|---|
| Strong IPO | 10% | $X |
| M&A | 25% | $Y |
| Stay private / secondary | 40% | $Z |
| Down / shutdown | 25% | $0 |
Use our expected value calculator.
Figure 2: Where intuitive math breaks down for startup grants.
Step 3 — Dilution and Preferences (Qualitative)
- Later rounds increase FD share count
- Liquidation preferences can absorb early exit proceeds
Step 4 — Compare to Cash Offer
Use job offer comparison with explicit haircuts for risk.
Figure 3: Total comp is more than headline salary—risk and liquidity matter.
Related reading
Disclaimer
Educational only—not investment advice.
Primary sources
| Source | URL |
|---|---|
| Investor.gov | https://www.investor.gov/ |