Concept-of-the-week
409A valuation
A Series A startup grants 50,000 options at a $5 strike price. An audit later reveals the FMV was actually $8. That $150,000 compliance gap isn't a rounding error — the IRS can treat every option as non-compliant deferred compensation under Section 409A. If your company is US-incorporated, this applies even if your team isn't in the US.
The penalty falls on the employee: a 20% federal penalty on the spread at vesting, plus backdated interest. Some states add their own penalty on top. One mispriced grant can cost an early employee tens of thousands on money they never saw. The company avoids the tax bill but gets the fallout: angry employees and painful re-pricing conversations.
The fix is structural. A safe harbor 409A valuation from a qualified independent appraiser shifts the burden of proof to the IRS. Most startups need a fresh one every 12 months or after any material event like a funding round. Standalone 409As typically cost $1,000 to $10,000+. The cost of skipping one lands on the people your equity plan was designed to retain.
What we’re watching
Neysa.ai raises $1.2B in funding
Source: Neysa.ai
Blackstone led a capital raise of up to $1.2 billion into Neysa, an AI acceleration cloud platform founded in India in 2023.
The structure: $600 million in equity from Blackstone and co-investors (Teachers' Venture Growth, TVS Capital, 360 ONE Assets, Nexus Ventures), plus $600 million in planned debt. The capital will fund deployment of over 20,000 GPUs in India, serving enterprises and government entities across financial services, healthcare, and public sectors.
Neysa says its systems are deployed and operated within India, with a focus on performance certainty and data assurance. For Blackstone, this extends a global thesis around AI infrastructure as a durable asset class, similar to data centres.
Our take on what this means for founders: as more compute capacity gets built regionally, the infrastructure layer of your AI stack becomes a strategic choice, not just a vendor decision. Where your data sits and where your models run may start influencing how investors evaluate your operational setup.
Source: Neysa
This week’s highlights
Talkiatry raises $210M Series D led by Perceptive Advisors, total funding now over $400M; employs 800+ psychiatrists across the U.S. (Source)
Lassie closes $75M Series C for its preventive-first pet insurance platform after crossing $100M ARR; backed by Balderton Capital, Felix Capital (Source)
Grafana Labs in talks to raise at $9B valuation led by GIC, up from $6.6B six months ago; ARR reportedly surpassed $400M (Source)
Ricursive Intelligence raised $335M at a $4B valuation just four months after launch; building AI tools for chip design, backed by Lightspeed and Sequoia (Source)
Modal Labs targeting $2.5B valuation for new round, more than doubling its $1.1B mark from its $87M Series B; focused on AI inference infrastructure (Source)
See you next week,
Team EquityList
