Series A 409A Valuations
A Series A adds a second preferred class and real auditor scrutiny. Here is how the valuation changes and what it costs.
What changes at Series A
You now have at least two preferred classes with different preferences, and your financials are more likely to be audited. The allocation model has more breakpoints to work through, and auditors will expect documentation that ties to your actual cap table.
How allocation works
An option pricing model treats each share class as a call option on enterprise value, with breakpoints where economics shift between classes. Preferences are satisfied first, and what remains flows to common. A discount for lack of marketability is applied to the common result.
What it costs
Series A companies typically fall in the $1,249 to $1,749 tiers depending on total capital raised. Every report includes your first 2 hours of audit support, so if an auditor or the IRS asks how a number was derived, someone who worked on it answers.
Frequently asked questions
Will my auditor accept the report?
Reports are prepared by credentialed professionals and documented so a reviewer can follow every assumption through to the conclusion. Your first 2 hours of audit support are included if an auditor has questions.
How does the option pool affect the valuation?
A larger unissued option pool increases fully diluted share count, which reduces value per share. It also affects the allocation because pool shares participate as common in the waterfall.
Do I need a new 409A if we raised an extension?
A priced extension is generally a material event, particularly if it changes the preference stack or implies a different enterprise value. A bridge on the same terms as the existing round may not be, but it should be assessed rather than assumed.