Series 409A Valuation

Definition

An independent appraisal of your private company's value for tax purposes—made by third parties specifically so the IRS can't argue your strike price was fraudulently low.

Example Usage

Our 409A valuation came back at $5M per share compared to our last funding round's $8M, which employees are definitely not discussing in Slack.

Origin

Named after IRS section 409A; became critical after startups started giving options

Fun Fact

A low 409A valuation is great for employees (lower taxes), but contradicts your Series B narrative.

Source: Tax and valuation terminology

Related Terms

Beginner

graduation round

When a startup raises funding from institutional VCs after initially bootstrapping or taking only angel money. It's like moving from community college to the Ivy League, complete with higher expectations.

🚀 Startup / VC

Advanced

participation rights

A clause letting preferred investors double-dip by getting their liquidation preference back AND participating in the remaining proceeds with common shareholders. It's having your cake, eating it too, and taking a slice of everyone else's.

🚀 Startup / VC

Intermediate

lock-up period

A contractual restriction preventing insiders from selling shares after an IPO, typically 90-180 days. Because letting founders dump all their stock on day one would be honest but catastrophic for stock price.

🚀 Startup / VC

Beginner

IPO (Initial Public Offering)

A startup's dream scenario where it becomes a public company and founders finally get to sell their stock—statistically less likely than winning the lottery.

🚀 Startup / VC

Intermediate

elephant hunting

A sales or fundraising strategy focused exclusively on landing enormous clients or investors rather than building up smaller ones. It's high-risk, high-reward betting where you either feast or starve.

🚀 Startup / VC

Intermediate

Go-to-Market

The strategy for launching a product to customers, which in startup land typically involves a 90-slide deck, a Slack channel called launch-war-room, and a blog post nobody reads. It's called go-to-market because go-to-three-customers-who-are-your-friends doesn't sound as impressive.

🚀 Startup / VC

Translate This Term

See “Series 409A Valuation” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on X Share on Facebook Share on LinkedIn

Discover a Term

Beginner

GMILY

If you wake up to a text that reads GMILY, it probably means "good morning, I love you." As you might expect, you're mos...