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For those less familiar with these terms, the options pool is the equity made available to current and future employees.
It allows you to adjust your options pool for employees, your initial stake in the company and your pre- and post-money valuations based off the seed and Series A rounds.
Much like an options pool, carry points will vest over five years, with 20percentt vesting on the 1st anniversary of a backed startup founder's allocation, and then vesting monthly until they are 100percentt vested on the 5th anniversary.
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They've created a so-called "transparent" term sheet that calculates how options pools, dilution and liquidation preferences impact returns for founders in different exit scenarios.
So in a world of more quick flips, we need to increase the size of options pools, eliminate liquidation preferences – which just get picked up in subsequent rounds of financing by new investors, who screw the old ones — and provide better acceleration for everyone.
Additionally, you're usually required to refresh the option pool (more dilution).
38) How big should the employee option pool be? 15 to 20percentt.
Auren: We were aligned on liquidation preference and the option pool.
Like most startups, we wanted our team to feel ownership over what we were building, so we sought to create a stock option pool.
Now consider what would happen if the same company raises another $10 million, expands the employee option pool to hire more executives and to support 300 people.
The venture investor is also likely to require a 10percentt unallocated option pool post the closing of the round, in addition to whatever options were already granted to make the initial hires.
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