409A Valuation Benchmarks by Funding Stage: 2026 Data and Ranges

If you have received a 409A valuation and are not sure whether the number is reasonable, you are not alone. The output of any 409A depends on your funding stage, capital structure, and industry — and without reference points, it is nearly impossible to know whether your result is normal or an outlier.

Typical 409A valuation benchmarks show common stock priced at 10%–30% of preferred at the seed stage, 20%–40% at Series A, and 35%–60% at Series B and beyond — with DLOM discounts (Discount for Lack of Marketability) ranging from 15% to 35% depending on stage and exit proximity. These are market-observed norms, not IRS-mandated thresholds — an individual valuation that falls outside these ranges may be entirely correct given a company's specific facts.

For a foundation on how 409A valuations work before diving into the data, see the complete guide to 409A valuations.

These 409A valuation averages and benchmarks by stage cover pre-seed, seed, Series A, Series B, and Series C and late-stage companies, with cross-stage tables and industry-level breakdowns.

What Is a 409A Valuation Benchmark?

A 409A valuation benchmark is a reference range that reflects what is commonly observed across venture-backed startups at a specific funding stage. Three metrics serve as the most useful benchmarks:

1. Common stock FMV as a percentage of preferred share price. This ratio shows how much value common shareholders hold relative to the most recently issued preferred stock. It compresses at early stages due to liquidation preferences and uncertainty, and expands as a company matures and exit probability rises.
2. The Discount for Lack of Marketability (DLOM) applied. DLOM accounts for the inability to freely sell private company shares in an open market. It is applied as a percentage reduction to the marketable minority value of common stock — the value derived from the OPM or PWERM allocation — to arrive at the non-marketable fair market value that becomes the 409A strike price. DLOM is higher at earlier stages where time-to-liquidity is longer.
3. Implied FMV per share relative to post-money valuation. This metric contextualizes the common stock price against the headline valuation number investors see.

These benchmarks are ranges, not fixed numbers, because no two 409A valuations are identical. The IRS safe harbor rules under Section 409A do not specify a required ratio between common and preferred — these are market-observed norms, not legal mandates.

The option pricing model is the most common framework used to derive these ratios.

How 409A Benchmarks Are Measured

Common stock as a percentage of preferred price. A qualified appraiser produces a fair market value (FMV) per share for common stock. Dividing that by the price per share paid by the most recent preferred investors gives the common/preferred ratio — the most widely used shorthand for benchmarking 409A outputs.

DLOM applied. The appraiser's DLOM assumption reflects their judgment about how long it will take for the company to reach a liquidity event and how probable that event is.

FMV per share relative to post-money valuation. This helps founders contextualize the absolute dollar value of their common stock FMV against the round price.

The backsolve method — which derives implied enterprise value from the price paid in a recent financing round — is the most common enterprise value anchor at seed through Series A. It works by taking the round price as an observable market input, then allocating total enterprise value across share classes using the option pricing model to derive the implied common stock value. At Series B, OPM allocation and PWERM become increasingly prevalent, particularly where no new round has closed recently. Updating a 409A after a funding round resets this anchor and recalibrates all three benchmark metrics.

Seed Stage 409A Valuation Benchmarks (2026 Data)

Seed stage 409A valuation outcomes vary more widely than any other funding tier. The presence or absence of a priced round is the single biggest dividing line.

Pre-Seed and Seed: Typical Common Stock Ratios

The table below reflects commonly observed outcomes across venture-backed startups at the pre-seed and seed stages. Individual results will vary based on capital structure and industry.

Pre-seed enterprise value ranges vary significantly based on whether the company has raised on SAFE instruments with valuation caps. A SAFE with a $10M valuation cap functions as an implied financing anchor that shifts the enterprise value range upward from these baseline figures.

At the pre-seed stage, common stock typically falls in the 5%–15% range because no priced round has established a credible enterprise value anchor. The appraiser must rely on probability-weighted scenarios, and in most such distributions, the downside scenarios carry substantial weight. Liquidation preferences protect preferred investors first, which means common shareholders receive little or nothing in low-exit scenarios.

At seed stage, a priced institutional round changes the calculus. The round price establishes an enterprise value anchor via the backsolve method, which is why the ratio typically moves to 10%–30% after a priced seed round closes.

For more on why common stock is lower than preferred in a 409A valuation, see the dedicated guide. For timing considerations, when to update your 409A covers the full set of triggers.

Seed Stage 409A Valuation by Industry

409A valuation by industry varies most at the seed stage, where revenue is thin and assumptions about future exit multiples dominate the model.

SaaS companies show the highest seed-stage ratios because exit multiples are well-established and comparable companies are plentiful. Biotech companies show the lowest ratios because clinical development timelines are long and binary. For detailed guidance on valuations at this stage, see the 409A valuation for seed startups guide.

Series A 409A Valuation Benchmarks (2026 Data)

By Series A, the company has demonstrated product-market fit or early revenue traction, an institutional round has established a credible valuation anchor, and the time to a potential liquidity event has compressed.

Series A: Typical Common Stock Ratios

The common/preferred ratio rises from seed to Series A because an institutional round establishes a stronger enterprise value anchor, reducing the probability mass on catastrophic failure outcomes, and demonstrated traction provides more credible inputs for upside scenario modeling.

Capital structure complexity matters significantly. A company with participating preferred that carries a 2x liquidation multiple before common participates will show a ratio toward the lower end, because preferred investors receive twice their investment back before common shareholders receive anything.

After any priced equity round, a new 409A valuation should be obtained before granting additional options. The round constitutes a material change in circumstances that renders a prior valuation stale, and continuing to rely on a pre-round valuation for post-round grants would jeopardize the safe harbor protection under Section 409A. For a detailed walkthrough, see 409A after a funding round.

Series A 409A Valuation by Industry

The OPM methodology governs how these industry differences flow through to the common stock value.

Series B and Late-Stage 409A Valuation Benchmarks (2026 Data)

Series B and later-stage post-Series B 409A valuation benchmarks reflect a fundamentally different company profile. Revenue is established, institutional backing is multi-round, and the probability of a liquidity event within a defined horizon is meaningful.

Series B and Beyond: Typical Common Stock Ratios

For late-stage 409A valuation at Series C and beyond, the ratio can reach 45%–70% because the probability of a near-term exit via acquisition or IPO is sufficiently credible that the Probability-Weighted Expected Return Method (PWERM) becomes appropriate. Unlike OPM, which models equity value as a continuous distribution of exit outcomes, PWERM weights specific, identified future liquidity scenarios — such as an IPO, a strategic acquisition, or dissolution — and derives a probability-weighted present value of common stock across those scenarios.

These ranges reflect typical outcomes for companies not yet in a formal liquidity process. Companies with an active IPO filing, signed letter of intent, or formal sale process may show ratios above the upper bounds stated here, as the exit probability approaches certainty and the DLOM compresses accordingly.

Even at late-stage 409A valuation levels, the common/preferred ratio rarely approaches 100% because liquidation preferences, remaining business risk, and the structural DLOM continue to suppress common stock value relative to preferred. For post-funding valuation updates, see post-funding 409A update. For guidance on what triggers a mandatory valuation refresh, see material event.

Late-Stage 409A Valuation by Industry

What Causes a 409A Benchmark to Fall Outside the Typical Range?

A 409A that sits below or above the typical 409A valuation ranges for your stage is not automatically wrong. It may accurately reflect your specific capital structure, business trajectory, or exit timeline.

Factors That Push a Valuation Below the Typical Range

• Participating preferred with a high liquidation multiple. A 2x or 3x participating preference means common stock receives little or nothing in exit scenarios below a high threshold.
• Large liquidation preference overhang relative to enterprise value. Common stock receives meaningful value only in the tail of the exit distribution.
• Industry with long development timelines. Biotech and hardware companies routinely produce ratios below the cross-industry averages.
• Poor recent financial performance. Missed revenue targets or elevated cash burn de-weight upside scenarios in the OPM.
• A recent down round or flat round. A down round resets the enterprise value anchor at a lower level, mechanically reducing common stock FMV.

Factors That Push a Valuation Above the Typical Range

• Near-term acquisition or IPO. When PWERM models a high-probability near-term exit, the common stock value can be substantially higher than an OPM would produce.
• A qualifying secondary transaction. Secondary transaction prices can constitute market evidence of common stock FMV for 409A purposes, but only when the transaction was conducted at arm's length between fully informed, willing parties with no tax-motivated pricing.
• Significant outperformance post-round. Strong revenue growth or major contract wins can justify a higher common stock value even before a new priced round occurs.

For more on the relationship between share class economics and 409A output, see common vs. preferred stock in a 409A. For a review of how these factors interact with methodology, see common 409A mistakes and the discussion of IRS audit defensibility.

How to Use These Benchmarks When Reviewing Your 409A

These 409A valuation benchmarks are a reference tool, not a grading system. A well-prepared valuation with full methodology documentation can defensibly fall outside any of the ranges in this article if the specific facts support the deviation.

Step 1: Identify your stage and industry, and locate the relevant benchmark range. Use the tables above to find the common/preferred ratio and DLOM range most applicable to your company.

Step 2: Compare your common/preferred ratio to the range. If your result falls within the typical 409A valuation ranges for your stage and industry, it is generally consistent with market norms. If it falls meaningfully outside the range, ask your provider to walk through the specific methodology and assumptions driving the deviation.

Step 3: Check the DLOM applied. If your DLOM is materially higher than the benchmark range for your stage, ask your provider which DLOM methodology they used — restricted stock studies, option-based models, or a quantitative QMDM approach — and how the specific inputs were determined.

For guidance on evaluating provider quality, see how to choose a 409A provider and the comparison at best 409A valuation providers.

409A Valuation Benchmarks Summary Table

The table below consolidates typical 409A valuation ranges across all stages. These are market-observed norms, not IRS-mandated thresholds — use them as a reference when comparing a specific 409A output to market norms, not as a pass/fail test.

The 409A valuation averages across stages reflect two converging dynamics: as companies mature, the probability of reaching a liquidity event increases, and the expected time to that event compresses. Both effects reduce the DLOM. Simultaneously, demonstrated revenue and institutional backing shift probability weight toward higher-exit scenarios in the OPM, increasing the common stock share of enterprise value. For a detailed walkthrough of what a new round means for your existing valuation, see 409A after a funding round.

Conclusion

The typical 409A valuation ranges in this article reflect commonly observed market ranges across venture-backed startups from pre-seed through Series C and beyond. Common/preferred ratios move from 5%–15% at pre-seed to 45%–70% at Series C and late-stage. The Discount for Lack of Marketability compresses from approximately 25%–40% at pre-seed to 8%–18% at late stage as exit proximity increases. Industry shapes outcomes within every stage band, with SaaS companies consistently showing the highest ratios and biotech companies showing the lowest. These are market-observed norms, not IRS-mandated thresholds.

Founders and CFOs who understand these ranges are better positioned to evaluate their valuation provider's methodology choices and ask informed questions when results look unusual. A well-documented 409A from a qualified appraiser can defensibly fall outside any of these ranges given the specific facts of a company's capital structure, financial performance, or exit timeline.

Understanding your 409A valuation cost is a related consideration when planning your next valuation cycle. For coverage of why founders prioritize this compliance requirement beyond regulatory necessity, why founders prioritize the 409A provides additional context.

If you are benchmarking an existing 409A or preparing for your next one, our AICPA-compliant valuations start at $499 and are signed by a qualified appraiser.