In comparison to an early grant a refresher grant will be smaller and worth less, but that doesn't make it "near" worthless.

First, if you have 7 years to decide if you want to exercise it, then every stock option has risk-free upside regardless of the strike price. Without the 7-year rule then the upside isn't so clear cut, but that doesn't mean they are near worthless at all.

Second, companies really don't grow that quickly. Over a 1 or 2 year time horizon, even a really successful company will 2x-4x in value (and the common stock might grow even less than this). If the strike price was low on the original grant, the strike price will also probably be pretty low on the refresher grant. Especially at early stages of a company's life when the options are priced at essentially zero, even if you 5 or 10x the value, the strike price will still be very low.

When you have more established companies and higher strikes prices, it is less of an issue because there might be a shorter term path to liquidity which takes away risk of exercising without being able to sell the stock.

The dramatic difference in price is really between pre-funding to post-funding. e.g. I know many companies where options were granted at 1c a piece, even as seed notes and safes were given out, but as soon as the Series A equity round hits, the 409A & thus options grant went up to $0.50+. That's a huge difference.

That said, your point about having 7 years to decide is entirely fair, and mostly negates that downside.

"Near worthless" is an entirely overblown characterization. The central factor is not the strike price, but the spread between your strike price and what you can eventually sell at (which should hopefully be higher than any strike price set at the last 409A). If you get an initial grant at $1/share, and then a later grant of the same number of options at $5/share, then is the later grant worth 1/5 of the initial one? No - if you end up selling for $15/share, then it's a difference between getting $14/share and $10/share pre-tax. It only ends up being a much worse deal if the strike price of the later grant is very close to what you later sell at, in which case your company is flatlining.

The real problem comes from the fact that any amount of stock that would generate significant return becomes prohibitively expensive to exercise. If you're granted 100k shares at $5/share, and they could eventually sell at $15/share; it does you very little good, because there's no way you can swing the half a million bucks it'll take to exercise in order to make your uncertain $1M profit.

On the other hand, if it's an amount of options you can afford to exercise (e.g. 1k shares @ $5 = $5k… most people could scrap together the funds for that.), your profit is unlikely to be more that 2-5x, which likely would return $10k, and at the most $25k on your $5k investment. A lot of risk and trouble to go through for very little gain…

That said, with a 7+ year time period to exercise after leaving the company, it's not an issue