Okuzeka
Entrepreneurship & Startups vocabulary · Equity & Valuation

Option pool

Meaning in entrepreneurship & startups, with examples

/ˈɑːpʃn puːl/nounAdvanced term

In entrepreneurship & startups, option pool means: A part of a company's shares set aside for future employees, advisors and other team members, usually granted as stock options.

In Turkish: opsiyon havuzu, çalışan hisse havuzu

How it is used

As part of a funding round, investors often ask founders to create or top up an option pool, frequently around 10 to 20 percent. If the pool is added before the investment, only the existing owners are diluted, so its size is an important point in negotiations.

Example sentences

  1. The new investors asked us to expand the option pool to 15 percent before the round.

  2. We'll use the option pool to hire a head of sales and two senior engineers.

Common collocations

  • create an option pool
  • expand the option pool
  • ESOP pool
  • unallocated options
  • stock optionThe right to buy a number of company shares later at a fixed price, often given to startup employees so they can share in the company's success.
  • dilutionThe fall in an existing owner's percentage of a company when new shares are issued, for example to new investors or for an employee option pool.
  • cap tableShort for capitalisation table: a list or spreadsheet that shows who owns what share of a company, including founders, investors, employees and options.
  • pre-money valuationThe value of a company just before new investment money comes in. It is used to work out the price per share in a funding round.

More terms: Equity & Valuation

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