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An option pool refers to the shares of a startup’s common stock that is set aside for future issuances to employees, directors, advisors, and consultants. Such issuance typically takes the form of stock options.
Options pools are often created in each round of venture financing. In a venture funding round, VC firms will often require that the funded company establish an options pool for employees. This is to make sure that the funded company can attract and retain its top talents. Option pools dilute the ownership of original owners/shareholders.
Having an options pool does not mean the stock has been issued to the employees. It only means that a portion of the stock is reserved for the employees, which may be subject to a vesting schedule.
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