Startup Equity Offer Calculator

You've been offered equity. The offer letter says "100,000 shares." What does that mean? This calculator models what your equity is worth across different exit scenarios — and what you'd actually net after taxes. The guide below explains what to look for and what questions to ask before you sign.

Shares offered to you

Company's fully diluted shares outstanding Ask the company for this number. "Fully diluted" means including the option pool, all issued shares, warrants. If they give you a non-diluted number, it overstates your ownership.

Grant type

Strike price per share ($) The 409A FMV when your grant was approved. Often listed as "exercise price" in the offer letter.

Current company valuation ($) Use the last round post-money valuation. For public companies, use market cap. This is the baseline for the exit multiple scenarios below.

Expected future dilution (%) Equity gets diluted with each funding round and new-hire grants. 15–25% over a 4-year vest is a reasonable estimate for early-stage; less for late-stage or near-IPO companies.

Liquidation preference overhang ($) (optional) Total amount preferred shareholders get paid first in an acquisition. Ask: "What is the total liquidation preference on all preferred shares?" A 1× non-participating preference = roughly total raised. Enters the calculation before common shares (including yours) receive anything.

Conservative exit valuation ($)

Base exit valuation ($)

Optimistic exit valuation ($)

Your other income this year (salary + bonuses, $) Used to estimate federal and state tax bracket at time of sale or vest.

Filing status

State income tax rate (%) California: 9.3%–13.3% · New York: ~6.85%–10.9% · Washington: 7% on long-term gains above $278K threshold (WA HB 1628) · Texas / Florida: 0%

How to read an equity offer

Shares mean nothing without the denominator

"100,000 shares" is a completely meaningless number without knowing the total shares outstanding. Your ownership percentage is what matters:

Ownership % = Your shares / Fully diluted shares outstanding × 100

Always ask for the fully diluted share count — meaning all issued shares, all outstanding options and warrants, and the full reserved option pool (including unissued shares reserved for future hires). Companies sometimes quote a non-diluted number that makes your stake look larger. The fully-diluted figure is the correct baseline.

What the offer letter doesn't tell you

An equity offer letter typically states: number of shares, grant type (ISO/NSO/RSU), strike price, and vesting schedule. What it usually does not tell you:

Total fully diluted shares outstanding — required to compute your percentage. Ask for it explicitly.
The size of the option pool — and whether it has already been increased for your hire or will be after your start date. A post-hire refresh dilutes existing employees.
Total liquidation preference — the amount preferred shareholders collect before common shareholders (including employees with options) receive anything in an acquisition. A company that raised $200M in preferred equity with 1× non-participating liquidation preference means the first $200M of acquisition proceeds goes to investors, not to you.
Whether the options are early-exercisable — a right to buy shares before they vest, enabling the 83(b) election clock and QSBS holding period to start early.

ISOs vs. NSOs vs. RSUs in an offer

The grant type determines how your gains are taxed:

Type	Tax at exercise / vest	Tax at sale	Typical context
ISO	No regular income tax at exercise. AMT exposure on the spread if you hold.	Long-term capital gains (15–20% federal) if you hit both the 1-year-from-exercise and 2-year-from-grant holding periods.¹	Early to mid-stage startups, non-executive employees. ISO limit: $100K of grant value per year can qualify.²
NSO	Ordinary income (up to 37% federal) on the spread at exercise.	LTCG on appreciation after exercise if held > 1 year.	Grants above the $100K ISO limit, consultants, advisors, non-employees.
RSU	Ordinary income on full FMV at vesting. No exercise required.	LTCG if held > 1 year after vest; otherwise short-term.	Public companies, late-stage pre-IPO with clear liquidity, and many large tech employers. No upfront cost — simpler but less tax-efficient for large early-stage gains.

For early-stage companies where you hope for a 10× exit, ISOs held through qualifying disposition are significantly more tax-efficient than NSOs or RSUs — potentially the difference between 20% and 37% on large gains. The catch: you must hold through the AMT exposure of exercising ISOs in an illiquid company, and California does not follow federal ISO rules (CA taxes ISO spreads as ordinary income at exercise).

Dilution is real, and it compounds

Most startups raise multiple rounds. Each round issues new preferred shares, which dilutes everyone's percentage. Additionally, the company will issue new options to future hires from the option pool — more dilution. Across a typical 4-year vest period at an early-stage startup, 15–25% cumulative dilution is a reasonable planning assumption; later-stage companies with a clearer exit path typically dilute less because they raise fewer additional rounds before IPO or acquisition.

Illustrative dilution example. You receive 1% of the company today. The company raises two more rounds that dilute you by 10% each time: 1% × 0.90 × 0.90 = 0.81%. On a $1B exit, that's $8.1M gross instead of $10M — a $1.9M difference before taxes. In a 10× exit scenario, the number is much larger. Model it with the future-dilution field above.

The liquidation preference problem

Venture-backed companies often have preferred stock with liquidation preferences — the right to be paid back before common shareholders in an acquisition. A standard 1× non-participating preference means investors get their money back first. A 2× participating preference means investors get 2× their investment and then also participate pro-rata in remaining proceeds. The details are in the company's cap table and investor agreements.

The practical effect: in a modest exit (2–3× of last round valuation or less), common shareholders can receive little or nothing after preferred investors are made whole. In a large exit (10× or more), the preference stack matters less because there's enough left over for everyone. Always ask for the total liquidation preference and preferred overhang before evaluating an offer at a VC-backed company.

What to negotiate beyond the share count

Most employees only negotiate the number of shares. The terms matter equally:

Post-termination exercise window: standard is 90 days after leaving. Some companies offer 5-year or 10-year windows, which matters if you leave before an IPO — a 90-day window on $500K of ISOs can force a premature exercise that triggers AMT on illiquid shares.
Early exercise right: ability to exercise unvested options immediately (paying today's low 409A price), file an 83(b) election, and start the QSBS and LTCG holding clocks from day one. Not all companies offer this; it's worth asking.
Cliff and vesting schedule: standard is a 1-year cliff (nothing for 12 months, then 25% vests) then monthly vesting over the remaining 3 years. Some companies offer 6-month cliffs or back-weighted schedules.
Acceleration provisions: double trigger acceleration means if you're laid off after an acquisition, your unvested equity accelerates. Single trigger is rarer but means acceleration at acquisition alone. For executives especially, this is negotiable.
Refresh grants: ask whether and when additional grants are made for performance. A one-time offer-letter grant with no refresh policy at a 4-year company means zero new equity in years 2–4.

QSBS: the early-stage tax multiplier

If your company qualifies as Qualified Small Business Stock under IRC § 1202, gains on qualifying shares may be partially or fully excluded from federal tax. Post-OBBBA rules (for stock issued after July 4, 2025):³

C-corporation with gross assets under $75M at time of issuance
Tiered exclusion: 50% of gain excluded if held 3 years; 75% if 4 years; 100% if 5+ years
Cap: greater of $15M or 10× adjusted basis per shareholder
Original issuance required (secondary purchases don't qualify)
Early exercise + 83(b) election at issuance is the cleanest way to start the QSBS clock while keeping your basis near zero (see our 83(b) election guide)

QSBS is a dramatic multiplier for early-stage grants: a 100% gain exclusion up to $15M means the difference between paying 20%+ federal tax and paying nothing. Not all companies qualify — many larger pre-IPO startups exceeded the $75M gross-assets threshold years ago. Ask a specialist to confirm your company qualifies before you exercise, not after.

When the calculator isn't enough

This calculator models a single equity grant in isolation. Equity compensation decisions compound across grant types, years, income changes, and state residency. A few situations where the numbers get complex enough to warrant professional modeling:

Early-stage ISOs with AMT exposure: exercising ISOs in an illiquid company triggers AMT on the spread. You pay cash tax now on stock you can't sell. The federal AMT recovers via AMT credit in later years, but California's AMT does not recover the same way. This is a multi-year cash flow decision.
Multiple grants at different 409A valuations: if you've been at the company for 3 years, you may have grants at several different strike prices and different eligibility profiles for QSBS, LTCG holding, and early exercise.
Moving states before exercise: California sources equity income based on the days worked in California during the period from grant to vest, even if you've moved to Texas by exercise date. A CPA or equity-comp advisor needs to model that before you leave.
IPO or acquisition coming in the next 12 months: the window for planning closes fast once the S-1 is filed or an M&A term sheet is signed. Many of the best moves (early exercise, 10b5-1 setup, estimated tax planning) require lead time.

Get matched with an equity-comp specialist

A one-time planning engagement with an advisor who models RSUs, ISOs, AMT, and QSBS regularly can pay for itself many times over on a single equity event. We'll match you with a fee-only advisor — no commissions, no product sales.