Carta 409A Valuation: Cost, Process, and Whether It's Worth It

If you're issuing equity to employees, contractors, or advisors at any point in your company's lifecycle, you need a 409A valuation. It's not optional—it's a legal requirement baked into the U.S. tax code. And if you've been exploring providers, you've almost certainly landed on Carta as the most frequently recommended option.

This guide breaks down exactly what a Carta 409A valuation covers, what it costs, how the process works, what you're actually getting for that price, and whether it's the right choice compared to alternatives.

What Is a 409A Valuation?

A 409A valuation is an independent appraisal of a private company's common stock, required by Section 409A of the Internal Revenue Code. The "409A" refers to a 2004 IRS provision that governs nonqualified deferred compensation—which includes stock options.

Here's why it matters: when you grant employees stock options, the exercise price must be set at or above the fair market value (FMV) of common stock at the time of grant. If you get it wrong—if the strike price is below FMV—those options become "discounted options" under 409A, triggering immediate taxation plus a 20% excise tax penalty on the employee. That's a disaster.

A 409A valuation establishes a defensible FMV for your common stock. Issued by a qualified independent appraiser, it gives you a safe harbor: as long as you set your option strike price at or above the 409A value, you're protected from IRS scrutiny.

How Often Do You Need a 409A?

The IRS requires a new 409A every 12 months—or sooner if a material event changes your company's value. Material events include:

• Closing a new funding round (any priced equity round resets the clock)
• A significant acquisition or partnership
• Material changes in the business (major revenue milestone, key contract, pivoting the core product)
• New IP, patents, or regulatory approvals
• Going public or beginning the IPO process

In practice, most fast-growing startups do a 409A every 6–12 months to stay ahead of the 12-month expiration.

What Does Carta Do?

Carta is best known as a cap table management platform. Started in 2012 as eShares, it has grown into the dominant software layer for equity management at startups and VC funds. Today, Carta manages more than $2.5 trillion in equity across more than 40,000 companies.

Carta 409A valuations are performed by Carta's internal valuation team—a group of certified professionals who follow AICPA (American Institute of Certified Public Accountants) Valuation Standards and IRS guidelines. Carta is not a software-only valuation—it's a full appraisal service that produces a defensible report signed by a credentialed analyst.

The output: a formal 409A valuation report, signed by a certified appraiser, that you can use to set your option strike prices for up to 12 months.

Carta 409A Pricing: What Does It Cost?

Carta's 409A pricing has evolved as the platform has matured. As of 2025–2026:

• Standalone 409A (no Carta cap table): Typically $1,500–$3,500 depending on company complexity
• Bundled with Carta cap table software: Often included in certain plan tiers or available at a discount ($800–$2,000)
• Renewal 409A (returning customers): Usually less expensive, often $800–$1,500
• Complex transactions: Late-stage companies, asset-heavy businesses, or unusual cap table structures will pay more—sometimes $5,000+

Carta's pricing is generally competitive with the market, particularly when bundled with their equity management platform. If you're already paying for Carta's cap table software, the discounted 409A is often the easiest and most cost-effective option.

The actual price you pay will depend on your funding stage, number of share classes, and complexity of your cap structure. Carta will typically provide a quote after you fill out an intake form.

The Carta 409A Process: Step by Step

Step 1: Intake and Information Gathering

Carta sends you a standardized information request. Expect to provide financial statements (last 12–24 months of actuals plus projections), cap table details, recent funding round terms, any outstanding debt or convertible notes, major customer contracts or milestones, comparable company data you're aware of, and information on any recent secondary transactions in your stock.

The intake form is generally straightforward. For early-stage companies with simple financials, this takes an hour or two. For later-stage companies with complex structures, it may require CFO-level input.

Step 2: Appraiser Review and Analysis

Carta's valuation team reviews the materials, builds their model, and applies relevant valuation methodologies. For most early-stage companies, this includes:

• Option Pricing Model (OPM): The standard approach for companies with multiple share classes, treats equity tranches as a series of call options
• Probability-Weighted Expected Return Method (PWERM): More common at later stages, assigns probabilities to different exit scenarios
• Current Value Method (CVM): Used for companies at or near an exit event

Turnaround time is typically 10–15 business days, though Carta offers expedited options if you need the valuation faster.

Step 3: Draft Review and Feedback

Carta delivers a draft report. You can review it for factual accuracy—they may have made assumptions about your business or financials that need correction. You cannot influence the outcome (doing so would compromise the independence of the appraisal), but factual corrections are expected and appropriate.

Step 4: Final Report Delivery

Once any corrections are addressed, Carta delivers the final signed 409A report. This is the document your startup attorney will reference when your board approves option grants at the determined strike price.

What's Actually in a 409A Report?

A Carta 409A report typically runs 20–40 pages and includes:

• Executive summary with the concluded FMV per share
• Company overview based on the information you provided
• Industry and market analysis
• Financial analysis including revenue multiples and DCF where applicable
• Comparable company benchmarking
• Valuation methodology description and selected approach
• Allocation methodology used to determine common stock value
• Conclusion and appraiser certification

The depth matters because the report needs to be defensible in an IRS audit. This is not a back-of-napkin calculation.

Carta 409A vs. Alternatives

Carta vs. Pulley

Pulley is a newer cap table management platform that also offers 409A valuations. Pulley's 409A pricing is often slightly lower than Carta's ($1,200–$2,500 range), and their turnaround can be faster for simple structures. Pulley is gaining share among early-stage startups but has a smaller track record in late-stage or complex scenarios.

Carta vs. Scalar

Scalar (formerly Solium Valuations) focuses exclusively on 409A and equity plan valuations. They're well-regarded for quality and have served hundreds of pre-IPO companies. Pricing is competitive with Carta, typically $1,500–$3,500, but they don't offer the cap table integration.

Carta vs. Big Four Accounting Firms

The Big Four (Deloitte, PwC, EY, KPMG) all perform 409A valuations, but their pricing is significantly higher ($5,000–$20,000+) and turnaround is slower. For most early-stage startups, this is overkill. The Big Four are more commonly used at late stage when the stakes are higher and investor scrutiny is greater.

Carta vs. Local CPA Firms

Some local accounting firms and independent valuation consultants offer 409A services at lower prices ($500–$1,500). Quality varies significantly. For very early stage companies with extremely simple cap tables and minimal grant activity, a lower-cost provider can work. As the company grows and option grants increase in number and value, the defensibility of the report becomes more important.

Is Carta Worth It?

For most startups, yes—especially if you're already using Carta for cap table management. The integration is seamless: your cap table data flows directly into the valuation model, reducing errors and turnaround time.

Carta is worth it if:

• You're already on Carta's platform (the bundled price makes it compelling)
• You're past seed and issuing options regularly
• You want a well-known, defensible provider if you're ever audited
• You're approaching a Series A or later and your investors or attorneys recommend using a recognized firm

Consider alternatives if:

• You're very early stage with a simple cap table and minimal grants
• You want the absolute lowest cost and can accept a provider with less name recognition
• You need a faster turnaround than Carta can provide

The main risk of going with a low-cost provider is that their report may not hold up under IRS scrutiny. If the IRS challenges your 409A and the appraisal isn't defensible, the penalties fall on your employees—the people who trusted you when they accepted their option grants.

Common 409A Mistakes Founders Make

Waiting too long after a funding round. Your existing 409A is invalidated by a new priced round. Founders who grant options in the weeks after a round closes without getting a new 409A are exposed. The fix: make getting a new 409A part of your post-close checklist.

Assuming a SAFE converts at your pre-money valuation. SAFEs are not a material event that invalidate a 409A, but they do increase capital at risk. Talk to your attorney about when a SAFE triggers the need for a new valuation.

Using the 409A value as your preferred stock valuation. The 409A establishes common stock FMV, not preferred. Common stock is always worth less than preferred because preferred shareholders have liquidation preferences. Your investors' preferred stock is priced in your round documents—the 409A is a separate exercise.

Not keeping records. The IRS can audit option grants years after they're made. Keep every 409A report and the board resolutions approving each option grant.

The Bottom Line

A 409A is not a nice-to-have—it's a legal requirement for any company issuing equity compensation. Carta is one of the most recognized and widely used providers in the startup ecosystem. For companies already using Carta's cap table software, it's often the simplest and most cost-effective path. For early-stage companies without a cap table platform, the decision comes down to your complexity level, your timeline, and how much you value having a defensible report from a well-known firm.

Whichever provider you choose: get the valuation before you issue options, not after. The penalties for getting this wrong are yours—and your employees'—to bear.