When do you need a 409A valuation?
You need a 409A valuation before your first option grant, after every priced round, and at least every 12 months while granting options — or immediately after any material event that changes company value.
Timing scenarios
| Situation | What it means for your 409A |
|---|---|
| Incorporating, no employees yet | Not yet — founder common stock purchased at incorporation is priced at par, before outside money |
| First hire being offered options | Yes — get a 409A before the board approves the grant |
| Closing a priced round (Series Seed/A/B…) | A new round is a material event: refresh the 409A after it closes, before the next grants |
| Raised on SAFEs, hiring now | Yes — SAFEs don't set your common FMV, and large SAFE raises can themselves be material |
| Granting to US employees from a non-US parent | Yes — Section 409A follows the US taxpayer, not the company's domicile |
| Only issuing restricted stock at incorporation | Generally not until options enter the picture, but confirm timing with counsel |
Material events that trigger a refresh
- Closing a new priced financing round (the most common trigger by far)
- A large SAFE or convertible-note raise at terms implying a meaningfully different value
- Receiving a serious acquisition offer or signing an LOI
- A secondary sale or tender offer where shares change hands at a new price
- A major inflection in the business — revenue step-change, flagship contract, regulatory approval, or a significant downturn
- Missing your forecast badly in either direction, or a major pivot
Frequently asked questions
How long is a 409A valuation good for?
A 409A valuation is generally valid for up to 12 months, or until a material event such as a new financing round occurs, whichever comes first. After a material event, a new valuation is typically needed.
How often do you need a 409A valuation?
While you are granting stock options, you generally need a fresh 409A valuation at least every 12 months and again after any material event that could change the company's value.
Do I need a 409A valuation?
If you are a private company granting stock options or issuing common stock to employees, you generally need a 409A valuation to set a defensible strike price and qualify for IRS safe-harbor protection.
How do I know if I'm too early or too large for a 409A?
There is no stage too early for a 409A. We look at a variety of valuation methods and choose which is right based on the information provided. As companies grow, different valuations are used ensuring there is no company too large or too small.