Interview prep · after the offer
Startup equity offer: what to ask the recruiter, and how to work out what it is worth
A startup equity offer is a number of shares or options with no price tag on it. To know what it might be worth you need four more numbers from the company: the total fully diluted share count, your strike price, the latest 409A valuation and the price investors paid in the last round. This page lists the questions that get them, what each answer tells you, and the sums to do with them.
Updated 13 October 2026 · the arithmetic and the questions · this is not tax or financial advice
The short version
- Ask for your percentage on a fully diluted basis. The share count alone means nothing.
- Your strike price is set by the 409A, which values your common stock below the investors' price.
- Investors are paid back first in a sale. Below that amount, common stock gets nothing.
- Most grants must be exercised within 90 days of leaving, and most vested options never are.
- The UK, Sweden and France have their own option schemes with better tax treatment. Ask which one you are getting.
- At a public company the equity is RSUs with a market price: read the big tech RSU guide instead.
The questions to ask, and what each answer tells you
Ask these once the offer is in writing, by email if you can, so you have the numbers on record. Holloway's equity guide warns that a company that refuses to tell you your percentage even when you are ready to sign is likely giving you a very poor deal.
What percentage of the company is this, on a fully diluted basis?
The share count alone tells you nothing. Fully diluted means every share, option and promised share is counted, so the percentage is real. Holloway's guide puts it bluntly: without the percentage, the number of shares is meaningless.
Are there convertible notes, SAFEs or warrants still to convert?
They turn into shares later and shrink your percentage. Ask how much dilution they will cause.
What is the strike price, and what was the latest 409A valuation, and when?
The strike price is what you pay per share to exercise. A 409A older than 12 months, or one done before a new round, may be about to change.
What was the price per share in the last round, and what did it value the company at?
The preferred price is the top of the range for what a share is worth today. Your common shares are worth less than that.
How much do investors get back before common stock gets anything?
The total liquidation preference. If the company sells for less than that, common stock, which is what you hold, can get nothing.
What is the vesting schedule, and is there a cliff?
Four years with a one-year cliff is the common pattern: nothing for a year, then a quarter, then monthly. Back-loaded schedules put most of the grant in years three and four.
How long do I have to exercise after I leave?
Usually 90 days. A longer window means you are not forced to find the cash to exercise, and pay any tax, the month you leave.
Can I exercise early?
Exercising before you vest, with an 83(b) election in the US, can cut the tax later. It also means paying now for shares that may end up worth nothing.
Is there acceleration if the company is sold?
Acceleration vests some or all of your unvested shares on a sale, or on a sale followed by losing your job.
Do people get refresh grants, and how often?
Refreshers top up your equity after you join. Without them, your stake only shrinks as later rounds dilute it.
Can the company buy back my vested shares?
A repurchase right lets the company take back shares, sometimes at a low price, when you leave.
How much money is left, and when is the next raise?
Runway tells you how soon the next round, and the next dilution, will come.
The arithmetic, worked through
A made-up offer, to show the method. Swap in your own numbers. Each step uses one answer from the list above.
Your grant: $20,000 to exercise it all
20,000 options at a $1.00 strike price
Your ownership: 0.20%
20,000 ÷ 10,000,000 fully diluted shares
Paper value at the 409A: $0 on the day of the grant
20,000 × ($1.00 409A − $1.00 strike)
Paper value at the round price: $60,000, a ceiling, over four years
20,000 × ($4.00 preferred − $1.00 strike)
After the next round: 0.16%
20,000 ÷ (10,000,000 + 2,500,000 new shares)
A $100M sale: About $92,000 before tax
0.16% × ($100M − $30M of preferences paid first) − $20,000
A $25M sale: $0 for common stock
Less than the $30M owed to investors first
The exit lines are simplified. Real payouts depend on whether investors convert to common, whether their preferences participate, how many shares exist by then, and tax. The point of the sums is the shape: your percentage shrinks with each round, the preferences come off the top, and the gap between the 409A and the round price is the gap between today's floor and a ceiling.
The words in the offer, in one sentence each
- Stock options give you the right to buy shares later at a fixed price, the strike price. You pay to exercise them.
- RSUs are shares you receive without paying. At private companies they are usually double-trigger: they need time served and a sale or IPO before they become yours.
- ISOs and NSOs are the two US option types. ISOs are not taxed as income when you exercise, though they can trigger alternative minimum tax; NSOs are taxed as income on the gap between the share value and the strike price.
- A 409A valuation is an independent appraisal of a private US company's common stock. US rules require your strike price to be no lower than it on the day of the grant.
- Preferred stock is what investors buy. It is paid back first in a sale, which is why its price is higher than your common stock's 409A value.
- A liquidation preference is the amount investors get back before common stock gets anything, often exactly what they put in, called 1x.
- The exercise window is how long you have to buy vested options after leaving. It is usually 90 days because US ISO tax treatment ends three months after you leave.
- An 83(b) election lets you pay tax on shares when you receive them instead of when they vest. It must reach the IRS within 30 days, with no extensions.
Vesting, cliffs and refresh grants
Four years with a one-year cliff is the standard at startups in the US and Europe: nothing vests in the first year, a quarter vests on the first anniversary, then the rest vests monthly. Some companies back-load instead. Snap's RSUs vested 10%, 20%, 30% and 40% a year when it went public in 2017, and Amazon's grants are widely reported to vest 5%, 15%, 40% and 40%. With a back-loaded grant, the yearly figure a recruiter quotes is an average you will not see in year one.
Refresh grants are not guaranteed. Carta's data for 2022 to 2024 shows about 20% of employees got one after their first year and nearly 50% within two years, each worth about 30% of a new-hire grant.
What usually happens to startup options
- Employees exercised just 32.2% of their vested, in-the-money grants in the last quarter of 2024, according to Carta. For most of the past decade it has been under half.
- In 2022, 46.1% of in-the-money options expired unexercised. 85% of grants had a 90-day window.
- Asked why, employees said they could not afford the cost or the tax (23%), it was too risky (18%), they were unsure or made a mistake (13%), or they thought the options were worthless (11%).
- Selling before an exit is possible but uncommon. Carta ran 71 tender offers in the first half of 2026, worth about $3 billion in total, and nearly 70% were at companies at Series C or later.
So plan for the cost of exercising before you need to. If the window is 90 days, the cash and the tax come due the quarter you leave, which may not be a quarter you chose.
Outside the US: the UK, Sweden and France
- UK, EMI options. If you exercise at the price set at grant, within 10 or 15 years, you pay no income tax or National Insurance, and capital gains tax may apply when you sell. Since 6 April 2026 companies with up to £120 million in assets and fewer than 500 employees can offer them, up from £30 million and 250; many guides still show the old limits. The cap is £250,000 of options per person over three years.
- Sweden, kvalificerade personaloptioner. Qualified employee options are not taxed as salary if you exercise them 3 to 10 years after grant, at a company with fewer than 150 staff, at most SEK 280 million in turnover or balance sheet, and no more than ten years old. Ordinary employee options are taxed as salary when you exercise. Ask which kind you are getting.
- France, BSPCE. For shares from 1 January 2025, gains are taxed at a flat 12.8%, or 30% if you have been at the company under three years when you sell, with social charges on top. Companies must be under 15 years old to offer them.
Tax rules change and depend on your situation. For your own grant, ask a tax adviser in the country where you will be taxed.
Using the answers in the negotiation
The terms you can negotiate are the number of options, the level (which moves base, bonus and equity at once), the exercise window and early exercise. The base salary is the part of the offer that is certain; the equity is worth what the sums above say, and only once there is a sale, an IPO or a tender offer. The negotiation guide covers how to ask. Some startups note equity next to the pay range in their ads; the Member of Technical Staff guide shows posted ranges at four AI companies.
Questions
How do I know what a startup equity offer is worth?
Ask for the total fully diluted share count, the strike price, the latest 409A valuation and the latest preferred share price. Your ownership is your shares divided by the fully diluted count; your paper value is your shares times the gap between a share price and your strike price. Neither is cash until there is a sale, an IPO or a tender offer.
What questions should I ask about stock options in a job offer?
What percentage of the company the grant is on a fully diluted basis, the strike price, the latest 409A valuation and its date, the latest preferred price, the total liquidation preference ahead of common stock, the vesting schedule and cliff, how long you have to exercise after leaving, whether early exercise is allowed, and whether there is acceleration on a sale.
What is a 409A valuation?
A 409A valuation is an independent appraisal of the fair market value of a private US company's common stock. It sets the lowest strike price the company can give your options, and it is usually lower than the price investors paid for preferred stock in the last round.
Why is my strike price lower than the price investors paid?
Investors buy preferred stock, which is paid back first in a sale and carries other rights. Employees get options on common stock, which the 409A values lower, and US rules require the strike price to be at least that 409A value on the day of the grant.
What happens to my options if I leave the startup?
Vested options usually have to be exercised within 90 days of leaving or they expire; Carta found 85% of grants had a 90-day window. Some companies give longer. Unvested options are lost. Carta's data shows employees exercised only 32.2% of vested, in-the-money options in late 2024.
Are startup stock options different in the UK, Sweden and France?
Yes. The UK's EMI options can be free of income tax and National Insurance when exercised, at companies with up to £120 million in assets and fewer than 500 employees since 6 April 2026. Sweden's qualified employee options avoid salary tax if exercised 3 to 10 years after grant at qualifying small companies. France's BSPCE gains are taxed at a flat 12.8% for shares from 2025, or 30% with under three years at the company.
Before you sign
Check the base before you weigh the equity
Paste the posting for the role you were offered. Calibrd's report benchmarks the pay for your level and location, so you know whether the certain part of the offer is fair before you put a value on the uncertain part.
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Sources
- Holloway, Guide to Equity Compensation: questions candidates can ask (updated 12 September 2022): the percentage on a fully diluted basis, convertibles, the last round, the 409A, the liquidation overhang, early exercise, the exercise window, acceleration, follow-on grants, repurchase rights
- Holloway, offers and negotiations: without the percentage, the number of shares is meaningless
- a16z, how startup options and ownership work (24 August 2016): ownership of the fully diluted capitalisation, 100 of 10,000 shares falling to 100 of 20,000
- Index Ventures, Rewarding Talent: option pool size: 1% at seed becoming 0.40% by Series D; pools of 10% at seed rising to 20 to 25% in the US
- Carta, 409A valuations (4 August 2026): the independent appraisal of common stock, the minimum strike price, usually lower than the preferred price, valid for up to 12 months
- 26 CFR § 1.409A-1 (Cornell LII): the exercise price may never be less than fair market value at grant; the 12-month appraisal safe harbour
- IRS Topic 427, stock options: statutory (ISO) and nonstatutory options, alternative minimum tax on ISO exercise, NSO income on the spread
- 26 U.S.C. § 422 (Cornell LII): the $100,000 ISO limit and the three-month rule behind the 90-day window
- 26 U.S.C. § 83 (Cornell LII): the 83(b) election within 30 days, not revocable
- Carta, RSUs (6 August 2026): double-trigger RSUs at private companies and the must-be-present condition
- Carta, vesting (29 July 2026): four years with a one-year cliff, then monthly
- Snap Inc., Form S-1 (February 2017): 10%, 20%, 30%, 40% vesting and RSUs that also needed an IPO or sale to vest
- Carta, equity refresh grants (4 April 2024): about 20% of employees refreshed at year one and nearly 50% by year two, at about 30% of a new-hire grant
- Carta, the stock options math (2 May 2025): 32.2% of vested, in-the-money grants exercised in Q4 2024
- Carta, 2022 employee stock options report (6 February 2023): 85% of grants with a 90-day window, 46.1% of in-the-money options expiring unexercised, and why employees did not exercise
- Carta, post-termination exercise period (18 April 2023): ISO treatment lasting three months after leaving, longer windows taxed like NSOs
- Carta, tender offers in H1 2026 (20 August 2026): 71 tender offers worth about $3 billion, nearly 70% at Series C or later, 57.9% median seller participation
- Carta, liquidation preferences (7 August 2023): common shareholders get nothing when the exit is below what preferred holders put in
- gov.uk, Enterprise Management Incentives: £120 million in assets and fewer than 500 employees from 6 April 2026, £250,000 in three years, no income tax or National Insurance on exercise at the grant-date value
- Inkomstskattelag (1999:1229), chapter 11 a, on lagen.nu: qualified employee stock options: exercise 3 to 10 years after grant, fewer than 150 staff, at most SEK 280 million turnover or balance sheet, company no older than ten years
- Skatteverket, personaloptioner: ordinary employee options taxed as salary when exercised
- impots.gouv.fr, selling BSPCE: 12.8% flat rate for BSPCE from 1 January 2025, 30% with under three years at the company