Startup Equity Math: '$400K in Stock' Needs a Discount — Here's the Formula
aakashgupta · x · 2026-10-09
Aakash Gupta explains why '$400K in stock' is the most misleading phrase in an offer, and the follow-up question that matters.
- Public company: the grant is worth face value and sellable on vest — the gold standard
- Private company: the number is a price set at the last funding round, untouchable until IPO/acquisition/tender, so it needs a discount
- His formula: Value = Quoted × payout odds ÷ 1.15^years until sellable; the 15% covers waiting and illiquidity, company risk goes into the odds
- Odds ranges: late-stage with revenue and tender history 70-90%; growth stage 40-60%; Series B or earlier 20-40%
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