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Option Pool Shuffle

Option Pool Shuffle

The option pool - the amount of options to be allocated to future employees - lowers your effective valuation.

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Alex Dean"moving part of the long abstract into the body of the article"
Alex Dean edited on 29 Nov 2017 8:04 pm
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Option Pool Shuffle

The option pool - the amount of options to be allocated to future employees - lowers your effective valuation. E.g. your effective pre-money valuation is not $8M but $6M, if 25% of the $8M is allocated to new options. The option pool only affects common stock. VH recommends using a hiring plan to determine what the appropriate size of an option pool should be.

The option pool - the amount of options to be allocated to future employees - lowers your effective valuation.

Article



Introduction

E.g. your effective pre-money valuation is not $8M but $6M, if 25% of the $8M is allocated to new options. The option pool only affects common stock. VH recommends using a hiring plan to determine what the appropriate size of an option pool should be.

Further reading

Author
Title
Link

Babak Nivi

The Option Pool Shuffle

Fred Wilson

Valuation and Option Pool

Categories