1x means “one times original purchase price” in conjunction with a liquidation preference. Liquidation preferences can be participating or non-participating.

4 Years with a 1-Year Cliff

4 Years with a 1-Year Cliff is the typical vesting schedule used by startups. A one year cliff means that nothing vests for the first year, but after a year the vesting would catch-up to 12/48, and then the remaining […]

83(b) Election

An 83(b) Election is an election made under the Internal Revenue Code that allows a person receiving shares (or units) under a vesting schedule to recognize income based on the entire value of the shares as of the date of […]

409A Valuation

A 409A Valuation is used to determine fair market value of a startup’s options. Section 409A of the Internal Revenue Code regulates the treatment of nonqualified deferred compensation to service providers for federal income tax purposes. A company must issue […]