How do I value startup equity?

Use scenario probabilities, dilution-aware ownership, and exit assumptions—then compare risk-adjusted outcomes to cash compensation.

Is 409A FMV my personal equity value?

409A is primarily a tax compliance input for strike prices—not necessarily your private market value.

What tools help model scenarios?

Use the startup equity expected value calculator and job offer equity comparison tool.

What is a dilution haircut?

A subjective reduction to account for future financing rounds increasing share count or preferences absorbing proceeds.

Should I ignore liquidity preferences?

No—preferences can make common equity worth little at modest exits even if headline percentages look large.

Is this investment advice?

No—this is an educational framework for compensation decisions.

How to Evaluate Startup Equity: A Quantitative Framework

Key Takeaways

Translate ‘basis points of FD’ into dollars only after you know share count and plausible exit values

Separate ‘economic dilution’ from ‘legal dilution’—pool expansions and SAFE conversion matter

Compare startup packages to public RSU offers using after-tax, risk-adjusted framing

409A is an input for taxes—not a market price for your personal EV model

Document assumptions and revisit each financing

Executive Summary

Quick Answer

Is there a single formula for startup equity value?

No. A useful model multiplies ownership × exit proceeds per share (or exit value × your share of fully diluted) in each scenario, then probability-weights outcomes. Liquidity preferences can make ‘1% FD’ misleading at moderate exits.

Source: Corporate finance intuition

Quick Answer

What inputs matter most?

Fully diluted shares outstanding, your grant share count, preference stack and senior debt, exit type (IPO vs acquisition), and your personal discount rate for illiquidity.

Source: Valuation practice (simplified)

Quick Answer

Where do tools help?

Use the expected value calculator and job-offer comparison tool on this site to stress-test assumptions—not to predict the future.

Source: Internal tools

Expected value decision tree for startup equity: IPO, M&A, stay private, and shutdown scenarios with probability weights — **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