Employee option pool
What is the typical size of an employee option pool?
The typical size of an employee option pool can vary depending on the stage of the company. At early stages, it's most common to see a 10-15% ESOP set aside for attracting and motivating early hires.
ESOPs below or above that range are not necessary a red flag, but may require an explanation. An early-stage company with under 10% ESOP may be underestimating their need to attract/motivate early talent, or, they might possess all early key skills in a co-founding team. An early-stage company with 15-25% ESOP may be preparing to compete for talent in a highly competitive industry (such as AI Infrastructure), or, they may be missing key talent on the founding team and looking to compensate with early hires getting larger chunks of ESOP shares.
ESOPs below or above that range are not necessary a red flag, but may require an explanation. An early-stage company with under 10% ESOP may be underestimating their need to attract/motivate early talent, or, they might possess all early key skills in a co-founding team. An early-stage company with 15-25% ESOP may be preparing to compete for talent in a highly competitive industry (such as AI Infrastructure), or, they may be missing key talent on the founding team and looking to compensate with early hires getting larger chunks of ESOP shares.