TL;DR: There are two numbers worth knowing about your equity: the conditional payout (what you actually get if the company exits at €X) and the expected value (the conditional payout weighted by how likely that exit is). Conditional payout = your % × exit value × what survives dilution × what survives the preference stack − strike − tax. Expected value multiplies that by the probability of the exit scenario actually happening. For a typical employee #5 grant of 0.5% in a seed-stage startup, the conditional payout at a modest exit is usually 25–35% of the recruiter’s headline number; the expected value is 5–15% of it. This post shows both, country-by-country, and what to ask before you sign.
The number on your offer letter — “your equity is worth $250,000 at the latest preferred share price” — is almost always wrong for you. It’s the price the last investor paid for a different class of stock with better rights, multiplied by your shares, ignoring everything that happens between now and an exit. Recruiters quote it because it’s flattering. It is not what you will receive.
This post replaces that number with one you can actually defend. We cover three sequential discounts every grant has to survive, real benchmark data from Equidam’s Valuation Delta and Carta, the differences between US, UK, French, Dutch, German and Estonian equity instruments, and a worked example you can copy onto your own offer.
Two formulas, not one
There are two numbers you should always compute, in order. The first is the conditional payout — what your equity is worth if the company actually exits at a given value. The second is the expected value — the conditional payout weighted by how likely that exit really is. Most online guides smush these together; keeping them separate is what makes the math honest.
Formula A — Conditional payout (what you get IF the company exits at €X):
(Your % ownership) × (Exit value) × (1 − future dilution) × (1 − preference stack haircut) − (strike price × shares) − (tax owed)Formula B — Expected value (what you can rationally expect on average):
Σ across exit scenarios of [ Conditional payout at scenario × Probability of that scenario ]
Formula A answers “what does this offer actually translate to if everything works?” Formula B answers “given how often things work, what’s this offer worth in cold-blooded expectation?” Both matter. The recruiter quotes neither.
Conditional payout — if the company exits
Worked example, employee #5 at a European SaaS startup raising a €5M post-money pre-seed:
- Grant: 0.5% of fully diluted shares.
- Future dilution from Seed → Series B: ~50%, compounding 13% per round across roughly 4 rounds (Equidam Valuation Delta H2 2025). Your 0.5% becomes effectively 0.25% by exit.
- Preference stack: assume 1× non-participating preferred. On any of the exits below the preferred holders prefer to convert, so there’s no haircut on common.
- Tax: assume a mid-range European stock-option treatment at roughly 30% effective rate. That’s broadly representative of French BSPCE (~30% combined), German §19a-eligible ESOPs (~26.4% capital gains), Italian stock options (~26%), or a properly structured Dutch STAK post-2023. It is notably better than Dutch SARs or German vSOs (which tax at 42–49.5% as ordinary income) and notably worse than UK EMI (10% BADR up to £1M).
Run the same 0.5% grant against four exit scales:
| If the company exits at | Gross conditional payout (0.5% × exit × 50%) | After mid-EU tax (~30%) |
|---|---|---|
| €40M modest acquisition | €100,000 | €70,000 |
| €400M strong outcome | €1,000,000 | €700,000 |
| €4B life-changing exit | €10,000,000 | €7,000,000 |
| €40B+ generational company | €100,000,000 | €70,000,000 |
These are the numbers worth dreaming about — and worth comparing against the recruiter’s pitch (€200,000 at €40M, €25,000 today at €5M post-money). On a successful €400M outcome, the engineer takes home €700k after a mid-EU tax bite. On a fund-returner €4B, it’s seven million. On a generational outcome (think the current OpenAI / Stripe / SpaceX / Anthropic class of company — the upper tail has gotten dramatically thicker in 2026), it’s seventy million. The instrument and the dilution still bite, but the conditional payout at a real exit is meaningful. Choosing a more punitive instrument (Dutch SAR, German vSO) takes another 15–25 percentage points off; choosing a favorable one (UK EMI) gives some of it back.
Expected value — once you weight by the probability of each exit
The catch: most pre-seed companies do not exit at any of these scales. The honest expected value requires multiplying each conditional payout by the probability of that exit actually happening, then summing across mutually exclusive scenarios. Probabilities below are disjoint buckets derived from Carta’s cumulative tail data on seed-funded companies (see the probability section below), with a generational tier added for the current crop of mega-private companies.
| Outcome (mutually exclusive) | Conditional payout (after tax) | P(exit at this scale or higher) — what a candidate intuitively asks | P(exit in this band) — the weight | P × payout |
|---|---|---|---|---|
| No exit (you get nothing) | €0 | — | 93.1% | €0 |
| €40M modest (€30–300M band) | €70,000 | 6.9% | 4% | €2,800 |
| €400M strong (€300M–€3B band) | €700,000 | 2.9% | 2% | €14,000 |
| €4B life-changing (€3B–€30B band) | €7,000,000 | 0.9% | 0.8% | €56,000 |
| €40B+ generational | €70,000,000 | 0.1% | 0.1% | €70,000 |
| Probability-weighted average outcome | 100.0% total | ~€142,800 |
Two probability columns, two different questions. The middle column answers “what’s my chance of seeing at least a fund-returner outcome?” (0.9%) — it’s the cumulative survival probability a candidate naturally cares about. The next column is the disjoint slice — the bucket probability used to weight each row in the final sum. They differ for every row except the last because the cumulative numbers stack as you move down the table.
The bottom number is the weighted average across all five mutually exclusive scenarios — you experience exactly one of these rows, never a combination. The €142,800 is the long-run average if you could run this exact lottery many times over; it is not a forecast of your actual take-home. Your most likely realised outcome is the top row: nothing.
Versus a recruiter pitch of €200,000–€400,000 at the recruiter’s preferred exit value, the honest probability-weighted average is ~€143,000 — and almost half of it sits in the 0.1% generational tail that most pre-seed companies will never approach. Strip the generational row and the weighted average drops to ~€72,800. Strip life-changing too and it collapses to ~€16,800.
Two things follow that most equity calculators get wrong. First, the modal exit is not the relevant input — the upper tail dominates expected value, and in 2026 the tail has stretched further than at any point in venture history. Second, a 0.5% grant in a generational-grade company is worth dramatically more than the same 0.5% in a “good but not great” company, not because the percentage is different, but because the conditional exit distribution is different. When you’re evaluating an offer, the company’s ceiling — not its modal outcome — carries the expected value.
The rest of this post shows how to do this calculation for your specific offer, in your specific country, with the specific instrument you’ve been granted.
What does “equity worth” actually mean?
There are at least three numbers you’ll hear:
1. Preferred share price (what investors paid). This is the per-share price from the most recent priced round. It’s the highest of the three, because preferred stock has liquidation preferences, anti-dilution rights, and information rights that common stock doesn’t. You don’t own preferred. Don’t anchor on this.
2. Common share fair market value (the 409A or independent valuation). In the US this is set by a 409A appraisal; in Europe an equivalent independent valuation is increasingly required for tax purposes. Common is typically valued at a 20–40% discount to preferred at early stages, narrowing toward parity near IPO. This is the number used to set your strike price, and it’s the number the tax authority cares about.
3. Expected value of your grant. This is what the post is about: the probability-weighted, dilution-adjusted, illiquidity-discounted, after-tax cash you can rationally expect. It is almost always the lowest of the three numbers — and it’s the only one that matters for your decision.
Treat the offer letter number the way you treat the MSRP on a car. It exists; it is not what anyone pays.
The three-discount mental model
Every employee grant must survive three discounts. Two of them shrink the conditional payout (your number if the company exits); the third converts that conditional payout into the expected value (your number on average).
Discount 1 — Future dilution (conditional, typical: 40–60% over the company’s lifetime). Every future round issues new shares and shrinks your percentage. At pre-seed, the median dilution per round is 13% globally, 10.7% in the EU and 16% in the US (Equidam Valuation Delta Q1 2025). A company that raises pre-seed → seed → Series A → Series B → Series C with average per-round dilution will leave a Day-1 employee with roughly half the percentage they started with. Add an option pool refresh at Series A (typically 5–10%) and you can be diluted further. This discount applies whether or not the company exits — it just compounds in the background.
Discount 2 — Preference stack haircut (conditional, typical: 0–100%, highly skewed). Investors hold preferred stock with liquidation preferences: they get their money back (1× is standard, 2–3× exists in distressed rounds) before common stock holders see anything. If the company has raised $50M and exits for $60M with 1× non-participating preferred, common stockholders share $10M. With 1× participating preferred, common shares $10M plus a pro-rata cut. With 2× participating, common can get nothing. This discount is binary on the downside and small on the upside — but the downside is the most likely outcome. It also applies only if the company exits; the size of the haircut depends on the size of the exit.
Apply discounts 1 and 2 (plus tax) to get the conditional payout — the number you receive if the company exits at €X. That’s Formula A.
Discount 3 — Probability of exit at that scale (the bridge from conditional to expected). Most startups don’t exit. According to Carta’s State of Private Markets data, only about 15–20% of seed-funded US startups now go on to raise a Series A (down from ~30% pre-2022), and the share that ever produces a return materially above the capital raised is in the single digits. For European companies the funnel is similar in shape with smaller exits at the top. This is not a single number — it depends on the exit scale you’re pricing. A 15–20% chance of any next-stage progression collapses to ~7% for a meaningful exit (>capital raised) and <1% for a fund-returner. Multiply each conditional payout by the right scenario probability to get expected value. That’s Formula B.
The shape that matters: discounts 1 and 2 erode your share of the pie. Discount 3 tells you how often there’s a pie at all. Compute them separately so you can stress-test each — for example, you can be more bullish on probability than the base rates and see how that moves the number, without changing the conditional math.
A common mistake is to add a fourth discount for illiquidity. Don’t — at least not on top of exit proceeds. The exit is the liquidity event; the discount has resolved by definition. Illiquidity matters only while you hold the shares. The next section explains where it actually applies.
How much will dilution shrink my stake before exit?
This is the easiest number to estimate because it’s the most observed.
Equidam’s Valuation Delta tracks pre-seed and seed valuations and capital raised across thousands of rounds. The H2 2025 update shows a global pre-seed median valuation of $5.61M with $0.80M median capital raised — a 13% median dilution per round (capital ÷ post-money). Quarterly volatility runs from 8.9% (Q4) to 17.4% (Q3) (Equidam Valuation Delta H2 2025).
Regionally, Q1 2025 shows a meaningful gap: EU pre-seed median valuation $4.57M with 10.73% dilution, US pre-seed median $7.87M with 16.02% dilution (Equidam Valuation Delta Q1 2025). US founders take more cash and dilute more; European founders take less and dilute less. Compounded across four to five rounds, this is the difference between a Day-1 employee owning 0.50% and 0.31% at exit.
A reasonable default: assume your percentage is cut by half between today and exit if the company will raise two more priced rounds; by two-thirds if it’ll raise three; by 75% for four. Ask the founder what their fundraising plan looks like and whether they intend to refresh the option pool at the next round (it dilutes everyone, including existing employees).
| Rounds remaining to exit | Default dilution survival rate |
|---|---|
| 0 (acquired now) | 100% |
| 1 (Series A then exit) | ~85% |
| 2 (A + B then exit) | ~70% |
| 3 (A + B + C then exit) | ~55% |
| 4+ (long IPO path) | 40–50% |
These ranges line up with Carta’s round-by-round dilution medians and with Index Ventures’ Rewarding Talent handbook ranges.
What’s the probability the company exits at all?
This is the discount most employees underestimate. The base rates are brutal.
From Carta’s published cohort tracking and the broader academic literature on venture outcomes:
- Only ~15–20% of seed-funded US startups go on to raise a Series A within 24 months — down sharply from ~30% in the 2018 cohort (Carta State of Private Markets). The Series A crunch has materially tightened the funnel since 2022.
- Roughly 7% of seed-funded startups produce an exit returning more than the capital they raised — the rest either fail outright or sell for less than invested (close to a zero outcome for common stockholders).
- ~3% reach exits above $500M, where employee equity becomes life-changing.
- The European funnel narrows further: State of European Tech shows European unicorns are ~4x rarer per dollar invested than US ones, though this gap has narrowed since 2020.
| Stage at which you join | Probability of any meaningful exit | Probability of life-changing exit (>$500M) |
|---|---|---|
| Pre-seed | 5–8% | <1% |
| Seed | 7–12% | 1–2% |
| Series A | 15–25% | 3–5% |
| Series B | 30–40% | 5–8% |
| Series C+ | 40–60% | 8–15% |
These are rough; quality of investors, sector, and capital efficiency move them meaningfully. They are also probabilities of any exit at the stated size, not probabilities of a specific exit value. For expected value math, use the probability of an exit large enough to clear the preference stack — typically half to two-thirds of the “any meaningful exit” rate.
A practical rule: if you join at seed, assume there is a 90% chance your equity is worth zero. The 10% case has to compensate for all the salary you gave up. If it doesn’t, you are subsidizing the founders.
How do liquidation preferences eat your common stock?
Most employees have never read the term sheet that governs their employer’s capital stack. They should.
Worked example: a startup has raised $20M in total preferred stock with 1× participating preferred terms. It exits for $30M. The preferred holders are entitled to get $20M back first, then participate pro-rata in the remaining $10M based on their fully-diluted ownership. If preferred holds 60% of the cap table, they take $20M + $6M = $26M. Common stockholders (founders + employees) share the remaining $4M.
Same exit, 1× non-participating preferred: preferred holders choose between (a) taking their $20M back, or (b) converting to common and taking 60% of $30M = $18M. They take the $20M. Common shares the remaining $10M — 2.5× more than the participating case.
Same exit, 2× participating preferred with no cap: preferred holders take $40M before common sees anything. With only $30M to distribute, common gets zero.
Three things to ask before you sign an offer:
- What is the participation structure on existing preferred (1× non-participating is founder-friendly and now standard; anything else is a yellow flag)?
- What is the total preference stack in dollars (the floor below which common stock returns zero)?
- Are there any pay-to-play, anti-dilution, or seniority terms favoring later rounds over earlier ones?
The answers will recalibrate your expected value more than any other single piece of information.
What about the illiquidity discount?
This is where many equity calculators go wrong: they apply a 20–40% illiquidity discount on top of expected exit proceeds, double-counting reality. The exit is the liquidity event. By the time the shares are sold, illiquidity has resolved — there is nothing left to discount on the proceeds you receive.
Illiquidity does affect you, just not in the cash flow at exit. It shows up in three places:
1. The price a private buyer pays for the company. Damodaran’s research places the illiquidity discount on private equity at 10–40% of equivalent public value, depending on firm size, profitability and time-to-liquidity. A strategic acquirer or PE buyer paying for a private company will typically pay less than a public market would for the same financials. This is already baked into the “expected exit value” input in the formula above — you don’t apply it twice.
2. Pre-exit secondary sales. If you want to cash out vested options before the company exits, you’ll go through a tender offer or an approved secondary buyer, and you should expect a 20–35% haircut to the last preferred round price. This matters if you’re forecasting partial liquidity (e.g., a Series E tender offer), but it does not apply to your share of an actual exit.
3. The friction of ever realising your equity at all. This is the underrated piece. Three structural factors can make vested equity practically inaccessible to you even if the company succeeds:
- Post-termination exercise windows. A 90-day window on US ISOs after you leave can force you to either pay the strike (and possibly AMT) in cash within 90 days or forfeit. That makes vested options worth materially less than fully unrestricted shares.
- Right of first refusal (ROFR) clauses. Standard in US plans, almost universal in EU plans. They make secondary sales slow and often impossible at the price you’d want.
- Transfer restrictions. Many European structures (Dutch STAK, German vSO) hold shares in a foundation or contractual derivative, so employees never receive registered shares at all. The “equity” is a contractual claim that converts only on a triggering event — typically a sale of the company.
The right way to think about illiquidity in your offer math: it’s already in the conditional exit probability and exit value (companies that can never realistically exit have lower expected exit values), and it’s a separate haircut you apply only if you’re modelling a pre-exit secondary sale. Don’t multiply it onto the final number.
How does the US-vs-Europe equity instrument change the math?
This is where most online guides stop being useful for non-US readers. The instrument matters because it determines (1) whether you have to pay anything to exercise, (2) when you owe tax, (3) what tax rate applies, and (4) whether social charges apply.
| Country | Instrument | Strike price | Tax point | Tax type at exit | Social charges |
|---|---|---|---|---|---|
| US | ISO (Incentive Stock Option) | At FMV (409A) | At sale (if held 1y after exercise + 2y after grant); AMT at exercise | Long-term capital gains (~20%) | None on the gain |
| US | NSO (Non-qualified) | At FMV (409A) | At exercise (spread = ordinary income) | Mix of ordinary + capital gains | Yes, on exercise spread |
| UK | EMI (Enterprise Management Incentive) | Often at nominal value | At sale | 10% Business Asset Disposal Relief rate up to £1M lifetime, then 20% CGT | None |
| France | BSPCE | At FMV at grant | At sale | 12.8% flat on gains if held 3+ years post-issuance + 17.2% social; higher otherwise | 17.2% social on the gain |
| Netherlands | SAR / STAK depositary receipts | N/A (cash-settled) or at grant FMV | At exercise / vesting moment chosen by employer (post-2023 reform) | Box 1 income (~49.5% top rate) on the spread | Yes, included in income tax |
| Germany | vSO (virtual / phantom shares) | N/A (cash bonus on exit) | At payout | Ordinary income (up to ~45%) | Yes, full social charges |
| Germany | Real ESOP via §19a EStG (2024 reform) | At nominal | Deferred up to 15 years or until sale/IPO/exit | Capital gains (~26.4%) on appreciation | Limited |
| Estonia | Stock options under Employment Contracts Act | At FMV | At sale (if 3y holding) | 20% capital gains | None on the gain |
The takeaway: a 1% grant in the UK (EMI), France (BSPCE) or Estonia is worth substantially more after-tax than the same 1% grant in the Netherlands (SAR) or Germany (vSO). UK EMI is arguably the most employee-favorable scheme in the world; Dutch SARs and German vSOs are among the worst because they’re taxed as ordinary income at exercise or payout. If you have a choice of jurisdictions for the same role, this matters more than headline grant size.
A common European pattern that founders should know: EU companies grant ~15% of equity to employees on average vs ~7% in the US, but European exits are smaller and tax treatment is harsher, so the per-employee dollar value tends to be lower. The bigger grant doesn’t always make up for the smaller pie. This is why instrument choice matters: a 0.5% EMI grant on a £100M UK exit nets the employee more cash than a 1% Dutch SAR on a €60M Dutch exit.
What questions should I ask the employer?
If you ask for these and the founder gets defensive, that itself is a signal. A confident founder shares this happily.
- Cap table summary — how many fully-diluted shares are outstanding, what percentage does the option pool represent, and what’s reserved versus granted?
- Total preference stack in dollars and the participation terms on each round.
- The latest 409A or independent common valuation and the date — and if they don’t have one, ask whether they’ve run an Equidam valuation recently, since that’s the cheapest defensible way to get a number you can actually anchor on.
- Strike price and post-termination exercise window — 90 days is standard but increasingly seen as predatory; 7–10 years (long-PTEW) is employee-friendly.
- Vesting schedule — 4-year monthly with 1-year cliff is the norm; ask about acceleration on change of control (single-trigger and double-trigger).
- Refresh policy — will you get additional grants at year 2, 3, 4? At what level?
- Secondary sale policy — does the company allow tender offers or approved secondaries?
- Realistic exit assumption — what scenarios is the founder underwriting? Be skeptical of “we’ll IPO at $10B”; ask what a base case acquisition looks like.
If a recruiter quotes a single number and won’t break it down into the components above, treat that as a red flag.
A full worked example
Mid-level engineer joining a Berlin-based B2B SaaS startup as employee #6 in May 2026.
- Stage: post-pre-seed, has raised €1M on an €8M post-money SAFE, planning a €4M priced seed in 12 months.
- Grant: 0.4% of fully diluted shares as German vSO (virtual shares — common for early-stage German startups before a §19a-eligible structure is set up).
- Vesting: 4 years, 1-year cliff, monthly thereafter.
- Headline value at recruiter math: 0.4% × €8M = €32,000. Recruiter says “could be worth €400,000+ at exit.”
Step 1 — Conditional payout (what you get if the company exits). Apply the conditional discounts only: dilution and preferences, then tax. No probability yet.
- Dilution: 4 more rounds (seed, A, B, exit), median EU 11% per round, plus a 7% option pool refresh at Series A. Survival rate ≈ (0.89)⁴ × 0.93 = 58%.
- Preferences: at any of the exits below, €15M raised in 1× non-participating preferred is converted away; no haircut on common.
- Tax: German vSO payouts are ordinary income at ~42% marginal rate including solidarity surcharge.
| If the company exits at | Gross conditional payout (0.4% × exit × 0.58) | After-tax conditional payout (~42% German vSO) |
|---|---|---|
| €60M modest | €139,200 | €80,736 |
| €600M strong | €1,392,000 | €807,360 |
| €6B life-changing | €13,920,000 | €8,073,600 |
| €60B+ generational | €139,200,000 | €80,736,000 |
Already useful: on a strong €600M outcome, the engineer takes home roughly €800k after German tax. That’s life-changing for most people. On a €6B fund-returner it’s €8M. On a generational outcome (the 2026 OpenAI / Stripe / SpaceX class), it’s €80M. These are the dream numbers — they exist, they’re just not the average.
Step 2 — Expected value (weight each conditional payout by the probability of that exit). Same engine, just multiplied by disjoint scenario probabilities for a seed-stage German B2B SaaS.
| Outcome (mutually exclusive) | After-tax conditional payout | P(exit at this scale or higher) | P(exit in this band) — the weight | P × payout |
|---|---|---|---|---|
| No exit (you get nothing) | €0 | — | 93.1% | €0 |
| €60M modest (€40–300M band) | €80,736 | 6.9% | 4% | €3,229 |
| €600M strong (€300M–€3B) | €807,360 | 2.9% | 2% | €16,147 |
| €6B life-changing (€3B–€30B) | €8,073,600 | 0.9% | 0.8% | €64,589 |
| €60B+ generational | €80,736,000 | 0.1% | 0.1% | €80,736 |
| Probability-weighted average outcome | 100.0% total | ~€164,701 |
The recruiter pitched €32,000 today / €400,000 at exit. The honest probability-weighted average across the full distribution is about €165,000 — but with a ~93% probability of the realised outcome being €0. That number is the long-run average if you could repeat the bet many times; for a single hire making a single decision, the most likely realised payout is nothing. Roughly half of the weighted average depends on the company landing in the 0.1% generational tier — strip that row and the weighted average drops to ~€84,000. Strip life-changing too and it collapses to under €20,000. The single biggest input to whether this offer is worth taking is your honest probability assessment of the upside tail, not the modal exit.
This calculation is uncomfortable. Do it anyway. If it makes the offer look bad, negotiate — for more equity, a refresh, a better instrument (push for a §19a-eligible structure if the founders can do it; Share Council can help Dutch and EU founders set up properly tax-efficient comp schemes and help employees figure out the tax position before they sign), or more cash.
For founders: how do you make your equity grant actually feel valuable?
The math above is also why so many European startup hires are skeptical of equity. They’ve done some version of this calculation, even informally, and concluded the equity is lottery-ticket compensation. If you want equity to actually motivate, three things move the needle:
1. Transparency about the cap table and preferences. Share the full picture proactively. Hires who see the numbers — including the bad scenarios — trust the upside more, not less. Tools like Share Council make ownership visible to employees in real-time, including dilution scenarios and preference impacts, and help Dutch and EU founders structure tax-efficient comp schemes (and help the employees on the other side actually understand their tax position).
2. Pick the most employee-favorable instrument available. UK EMI, French BSPCE, Estonian options, German §19a-eligible ESOPs, Dutch STAK with proper structuring. The juice-per-grant is dramatically higher than virtual schemes. Yes, it’s more legal work upfront. The recruiting payoff justifies it.
3. Use governance and information rights, not just financial upside. Rutgers research on ~60,000 US companies, summarized in Share Council’s research collection, shows that employee-owned companies produce roughly 10% higher total return to shareholders, with lower turnover and lower sick leave — but the effect is materially stronger when ownership comes with governance rights and information access, not just a financial claim. Make employees feel like owners, not lottery-ticket holders.
The headline EU-vs-US gap (15% vs 7% of equity granted to employees) won’t matter to recruits if they assume the European pie will be smaller and the tax harder. Counter that with transparency, instrument choice, and real ownership.
Closing FAQ
Q: Should I take the equity or ask for more cash?
A: Calculate the honest expected value using the formula above. If it’s less than the salary you’re giving up versus your next-best offer, ask for more cash, more equity, or a better instrument. Don’t accept lottery tickets at face value.
Q: What’s a fair equity grant for an early employee?
A: Index Ventures’ Rewarding Talent suggests 0.5–1.5% for the first 10 employees in Europe, 0.25–1% in the US, varying by role and seniority. CTOs and VPs at seed stage typically get 1–3%. Adjust for stage: a Series A employee #1 should get more than a Series C employee #1.
Q: What is a 409A valuation and do I have one in Europe?
A: A 409A is a US independent valuation of common stock used to set the strike price on options and avoid IRS penalties. Most European countries have an equivalent: HMRC valuations for UK EMI, the BSPCE valuation for France, and increasingly required independent appraisals in NL and DE. A defensible valuation triangulates multiple methods — at Equidam we use a five-method stack (Scorecard, Checklist, DCF Long-Term Growth, DCF Multiples, Venture Capital Method).
Q: What happens to my equity if I leave?
A: Vested shares stay yours, but you typically have a 90-day post-termination exercise window for US options — meaning you must pay the strike (and possibly AMT) in cash within 90 days or forfeit. Some companies offer extended (7–10 year) windows. Ask. In the UK with EMI, you have 90 days to exercise to retain EMI tax benefits. For Dutch SARs, German vSOs and Estonian options, the rules vary by plan — read your grant agreement.
Q: Will my equity be worth more if my employer raises another round?
A: The per-share price will go up, but your percentage will go down. Whether the dollar value of your stake increases depends on the round’s step-up. Per Carta data, median Seed → Series A step-ups have been 1.5–2.5× in 2024–2025; Series A → B around 2× in good markets. A round at a “flat” or down valuation hurts you; a 3× up-round helps even after dilution.
Q: How are SAFEs different from priced rounds for employees?
A: SAFEs and convertible notes don’t immediately set a share price, so they don’t change the option strike price either. They do dilute existing equity holders when they convert at the next priced round. Carta’s 2025 data shows post-money SAFE caps clustering at $7.5M for rounds under $250K, $10M for $250K–$1M rounds, $15M for $1M–$2.5M, and $20M+ above $2.5M.
Want to value your own offer?
The math above is generic; your situation is specific. Three resources:
- Equidam — value any startup using the five-method stack used by 160,000+ founders and investors. Useful for stress-testing the “expected exit value” input in the formula above.
- Share Council — for Dutch and EU founders setting up employee comp schemes (instrument choice, tax structuring, real-time ownership visibility) and for employees who want help working out the actual tax position on the offer in front of them.
- The numbers in this post will move. Equidam publishes the Valuation Delta twice a year with refreshed pre-seed and seed benchmarks; Carta publishes State of Private Markets quarterly. Re-run your math when new data is out.
The single thing to take away: the headline number on your offer letter is the start of the calculation, not the end of it. Apply the three discounts, sum across the exit distribution rather than anchoring on a single scenario, and decide with the honest number.