What every founder & employee should know about their startup equity

Startup equity is often the biggest asset someone owns — and the one they understand least. This is the plain-English guide to the seven things that actually decide what your stake is worth to you, and the deadlines that quietly cost people real money.

Why this matters, briefly. The gap between “I have some equity” and “I understand my equity” is usually worth five or six figures. People forfeit options by missing a 90-day window, trigger an avoidable tax bill by exercising at the wrong time, or sell at a worse discount than they needed to — not because the answers are hard, but because no one told them what to look at. Here's what to look at.

Know exactly what you hold

“Equity” hides very different things. Options (ISOs, NSOs, EMI, BSPCE) are the right to buy shares at a fixed strike price — you don't own shares until you exercise. RSUs typically become shares on a liquidity event or set date. Common shares are what you get after exercising, and rank behind the preferred shares investors hold. Your grant document has the answer; find it before anything else, because everything downstream depends on it.

Know what it's really worth

There's no live price for a private company, and your “paper” value (share count × last-round price) is not what you'd receive today. A realistic figure adjusts for your share class and the discount a buyer expects on an illiquid, minority stake. Start with a number, then refine it.

Value my equity →Free estimator — a realistic range in seconds What discount is fair? →Why a private sale prices below the headline

Know what it costs to exercise — and the tax it triggers

Exercising options costs cash (the strike), and can create a tax bill before you have any proceeds — most painfully the AMT on US ISOs. Model this before you act; the number surprises people.

Cost of exercising →What it takes to turn options into shares US ISO / AMT calculator →The tax you might owe just to exercise

Know how dilution changes your slice

Every funding round issues new shares, so your ownership percentage falls even as your share count stays the same. That's not necessarily bad — a smaller slice of a much bigger company can be worth more — but you should see it clearly.

Dilution calculator →How each round changes your real ownership What are my shares worth? →Paper value vs what you'd actually get

Know whether — and how — you can sell

Selling before an exit (a “secondary”) is often possible, but it runs through your company's rules: a right of first refusal, co-sale rights, and board or company approval. Some companies restrict transfers entirely. Check first, so you don't line up a sale you can't complete.

Can I sell before an exit? →The rules that decide whether you can Who buys private shares? →The realistic buyers, in order

Know the tax where you live

Tax is where general advice misleads most — it depends on your grant type, holding period, residence and reliefs. In the US, the QSBS exclusion can make a large part of a gain tax-free; in Europe, treatment varies sharply by country and scheme.

United States — rules & tax →ISO/NSO/RSU, AMT, capital gains, QSBS QSBS calculator →How much of a US gain could be tax-free United Kingdom →EMI, CGT and BADR Germany →Options vs shares, capital income

Know the deadlines that cost money

Three clocks quietly decide outcomes: the ~90-day window to exercise options after you leave (miss it and they're gone); the US QSBS holding period (sell too early and the exclusion is lost); and the 83(b) election window (30 days from grant, for restricted stock). None are hard to handle — but only if you know they exist.

Turn understanding into a plan

If you'd rather not assemble this yourself, the Equity Toolkit gives you the checklists, document requests and country tax notes in one place — and the Personalized Equity Report runs your own numbers into a clear, scenario-by-scenario picture in a few minutes.

See the toolkit & report →

Questions people ask

What's the most common expensive mistake with startup equity?

Letting a deadline pass without understanding it — most often the ~90-day window to exercise options after leaving, or missing the QSBS holding-period clock in the US. Both can cost far more than the effort of understanding them would.

Do I need to sell to benefit from understanding my equity?

No. Most of the value is in making good decisions — when (or whether) to exercise, how to plan for tax, and what your stake is realistically worth — long before any sale.

Go deeper by company

US pre-IPO companies →OpenAI, Stripe, Databricks, SpaceX & more EU unicorns →Revolut, Bolt, Mistral, N26 & more

General information only — not financial, tax or legal advice, and not specific to your situation. Rules and tax vary by country and change over time; confirm your own position with a qualified professional. PrivateTechShares is an education and tools service: it is not a broker or marketplace, does not introduce buyers and sellers, does not hold funds, and does not execute or advise on transactions.