      onlycfo.io · 2023-07-11
      · 1059d
    

State of Private Company Stock Options: 409A Valuations & Exercise Trends

The article analyzes Carta's 409A valuation data showing significant declines in private company valuations, particularly at later stages (Series C+ experiencing ~45% decreases in 2023 Q1), while explaining the mechanics of 409A valuations, their divergence from preferred stock pricing, and declining employee exercise rates due to market conditions and underwater options. It provides guidance on understanding equity value for employees and highlights companies' underutilization of option repricing strategies.

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Metrics in this report

409A Valuation Decrease Rate - Seed Stage

14%percent

Seed stage companies, 2023 Q1

409A Valuation Decrease Rate - Series B

34%percent

Series B stage companies, 2023 Q1

409A Valuation Decrease Rate - Series C and Later

45%percent

average

Series C and later stage companies, 2023 Q1

Common Stock FMV Ratio to Preferred Stock

0.33ratio

rule_of_thumb

Private company stock option valuations at fundraise

Employee Stock Option Exercise Rate Decline

50%percent

Percentage reduction from 2021 peak to 2023

Public Software Market Gain YTD

31%percent

Emerging Cloud Index, from beginning of 2023