Do I Need a 409A Before Issuing Options?

Yes. Get a 409A valuation before you issue employee stock options. The report sets the fair market value your option strike price is based on. Granting options without a current 409A puts the safe harbor presumption at risk.

Why does the 409A come before the grant?

Option strike prices are supposed to sit at or above the common stock fair market value on the grant date. A 409A valuation is how most startups establish that number in a way that can support safe harbor. Safe harbor is a presumption that the valuation is reasonable unless shown to be grossly unreasonable. It is not a guarantee of IRS acceptance or audit outcomes.

Without a contemporaneous, independent valuation, the board still has to set a strike price, but the company carries more risk defending that number later with auditors, counsel, or the IRS. The practical sequence for founders is simple: valuation first, then grants.

How does getting one before the first grant work?

Subscribe at get-started at $99/month on a 12-month term, billed monthly. Complete the short onboarding form and upload your cap table and documents. Cap table upload takes under 5 minutes. CSV is supported.

409A.io uses an OPM backsolve to the most recent financing with a GPC cross-check, prepared in accordance with AICPA guidelines for privately-held equity issued as compensation. Same methodology used by firms charging $3,000 to $5,000. Typical firms charge $3,000 to $5,000 and take 2 to 4 weeks. Big Four firms often charge $8,000+ and take 4 to 8 weeks.

409A.io delivers an audit-ready report within 48 hours of receiving your documents. Every report is reviewed by a valuation professional from the MELD team before delivery. Direct auditor support is included. We answer auditor questions about methodology and conclusions.

409A.io was spun out of MELD Valuation. MELD has completed 10,000+ valuations across 20+ industry sectors, valued $250B+ in assets, and has zero audit issues across its history. The team brings 16 years of valuation experience. Built for pre-seed through Series A.

When else does timing matter?

Get the first 409A done before the first option grant, not after offers are signed. Refresh at least every 12 months, and after any material event such as a new financing round. Updates upon request and material-event coverage are included during your term.

One plan covers the initial report, updates, material-event coverage, and auditor support. Everything is included at $99/month on a 12-month term. You pay first at get-started, then complete onboarding.

If your structure later includes non-standard instruments, structured equity, or complex waterfalls, graduate to MELD, or tell us your situation and we will point you the right way. Same team either path. We also work with leading cap table providers and offer preferred pricing through those relationships.

What is the next step?

Subscribe at get-started, upload your documents, and get the audit-ready report within 48 hours once we have them. Then issue options against a current fair market value.

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