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Venture Financing

Option Pool

Shares reserved to grant future employees as stock options

What it is

An option pool is a block of shares set aside to grant to future employees as stock options. It is carved out of the cap table, usually at an investor's request, as part of a financing. A typical pool is around 10-20% of the company.

Why it matters

Pools are how startups pay talent they can't afford in cash. The catch: investors usually insist the pool be created or topped up from the PRE-money valuation, so the dilution falls on founders, not the new investor.

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