What is Strike Price?
Strike Price
The Strike Price (or exercise price) is the fixed price per share at which an employee has the right to purchase stock options in the future.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Strike Price helps founders model equity distributions when structuring rounds for employee stock option exercise agreements.
Detailed Deep Dive
The Strike Price (or exercise price) is the fixed price per share at which an employee has the right to purchase stock options in the future.
Frequently Asked Questions
Q:How is the strike price determined?
It is set by the board of directors and must match the Fair Market Value (FMV) established by a 409A valuation.
Q:How do employees make money from options?
By buying shares at the strike price and selling them at a higher market value during an exit event.
Quick Facts
- CategoryFunding
- Key ApplicationEmployee stock option exercise agreements
Coverage Trend12 Weeks
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