Employee options worth at exit after dilution (worked example)

TL;DR outcome

Two more 20% dilution rounds cut a 0.21% grant to roughly 0.13% at exit.
At a $400M exit, 25,000 options at a $0.75 strike yield about $6.3M pre-tax in this model.
The strike price break-even is the first true inflection point.

The situation

You have a stock option grant and want a grounded answer to: what is this actually worth if the company raises two more rounds and exits? This model assumes a simple dilution path and no taxes.

Inputs that matter (and which ones do not)

Matters most

Total shares and option count.
Strike price.
Future dilution.
Exit valuation.

Does not matter here

Vesting schedule details beyond vested vs unvested counts.

Interactive model

Breakpoints / inflection points

The breakpoints table marks the exit valuation where the per-share value first exceeds the strike price. Below that, the options are underwater.

Worked example (numbers)

Step	Value
Options granted	25,000
Strike price	$0.75
Current total shares	12,000,000
Dilution rounds	2 x 20%
Exit valuation	$400,000,000
Estimated net proceeds (pre-tax)	$6,300,000

What changes if...

Dilution tightens: moving from 20% to 18% per round increases exit ownership by several basis points.
Exit is larger: doubling the exit more than doubles net proceeds.
Strike price rises: higher strike prices delay the break-even inflection point.

Common mistakes

Ignoring dilution and using current ownership at exit.
Assuming all options are vested without checking the schedule.
Forgetting exercise cost when quoting net proceeds.

Checklist / next steps

Validate your total shares and current valuation with the latest option grant letter.
Ask your finance team how they estimate future dilution.
Use the Employee Calculator for more detailed scenarios.

References

Last updated

2026-01-23: initial publication with base and upside scenarios.