What are common 409A valuation mistakes?

Most 409A mistakes are not exotic valuation failures. They are ordinary process failures: using the wrong date, leaving out a financing, or continuing to grant options after the facts have changed.

The mistakes I see most often are:

• Getting the report after the grants. A later valuation does not retroactively establish fair market value on an earlier grant date. Get the report before the board approves the options.
• Treating 12 months like a guarantee. Twelve months is the outside limit, not a promise that the value stays valid. A financing, acquisition offer, secondary sale, major forecast change, or other material event can make the old conclusion stale sooner.
• Sending incomplete inputs. Missing SAFEs, side letters, updated forecasts, debt, or changes to the cap table can distort both enterprise value and the allocation to common stock.
• Confusing preferred price with common-stock FMV. Investors usually buy preferred shares with rights employees do not receive. Copying the last round price into the option strike price ignores that economic difference.
• Starting with the answer you want. A target strike price is not a valuation input. The analysis has to follow the company-specific facts, even when the result is inconvenient.
• Filing the report and forgetting it. Keep the report, supporting data, board approvals, and grant records together. A correct number is harder to defend when the timeline is missing.

The practical fix is a calendar and a clean data room. Review when you need a 409A valuation, understand what makes a report hold up under scrutiny, and make one person responsible for checking every new grant against the valuation date and any later material event.

For the whole sequence from first grant through refreshes, use the founder's guide to 409A valuations.