Anything other than pro-rata with MFN will have a tax liability for you. If the company was valued at $1M when you joined and you got 1% (simple numbers), and

Anything other than pro-rata with MFN will have a tax liability for you. If the company was valued at $1M when you joined and you got 1% (simple numbers), and then the company raises $2M at a $10M pre-money valuation, your share goes down to 1%*(10/12)=0.83%. To keep you from dilution without you buying new stock, then company would "gift" you new shares, about 0.17% (a bit less but it doesn't matter). You'd then have to pay regular income tax on those $20k worth of stocks, likely at the highest tax bracket. It gets worse with higher valuations, and if it's your first startup you'll likely go bankrupt from the taxes before you get to a liquidation event. (Having pro-rata rights doesn't make this cheaper: you'd need to pay the company the whole $20k to exercise your rights. My goal was to demonstrate that there isn't a way to get no dilution for free.)