Startup Equity & Stock Options Calculator – ISO, NSO & RSUs Value Simulator
Understanding Startup Stock Options & Equity Grants
Working at a high-growth startup often comes with equity compensation in addition to base salary. Understanding how your stock options translate into real financial value requires modeling your strike price, current 409A fair market value, and prospective exit liquidity events (IPO or acquisition).
ISO vs. NSO vs. RSU Differences
- Incentive Stock Options (ISOs): Typically granted to full-time employees in the US. No ordinary income tax is owed at exercise, but the spread between the strike price and FMV is an AMT preference item that can trigger Alternative Minimum Tax.
- Non-Qualified Stock Options (NSOs): Common for advisors, contractors, and international workers. The spread at exercise is taxed immediately as ordinary income subject to payroll taxes.
- Restricted Stock Units (RSUs): Actual shares granted outright without an exercise price. Typically used by late-stage private unicorns ($1B+) and public tech companies. Taxed as ordinary income as soon as they vest.
Standard 4-Year Vesting with 1-Year Cliff
The tech industry standard vesting schedule requires 12 months of employment before your first 25% of shares vest (the "cliff"). Following month 12, options vest proportionally each month (1/48th per month) until full 100% vesting at month 48.
Frequently asked questions
What is a 409A valuation?
A 409A valuation is an independent appraisal of a private company's common stock required by the IRS. It sets the fair market value (FMV) used to price stock option grants.
What happens to unexercised options if I leave the company?
Most startup option plans specify a Post-Termination Exercise Period (PTEP), traditionally 90 days after leaving. If you don't pay the exercise cost within this window, unexercised options are forfeited back to the company pool.
How does dilution affect my equity percentage?
As a company raises subsequent venture capital rounds (Series B, C, D), new shares are issued to investors, reducing your percentage ownership. However, if company valuation multiplies faster than dilution, the absolute dollar value of your shares increases.
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