409A valuation and strike price: what startup employees should know

For US private companies, a 409A valuation often informs the strike price for option grants. A lower strike can make exercising cheaper if the company grows.

But a low strike is not a promise that the shares are valuable. It is one input in the option economics.

The spread between the current share price and your strike price can create tax exposure, especially when exercising before liquidity.

That is why Grantwise separates exercise cost, taxable gain, and ISO AMT exposure instead of showing only a net number.

If the latest preferred price, 409A value, and strike price are very different, ask what each one represents.

The more you understand the pricing context, the easier it is to judge whether exercising is realistic.