ESOP

Also called Employee Stock Option Pool and Option Pool

A block of shares set aside to grant to employees as stock options, so the people you hire early can own a piece of what they build. Usually 10 to 15 percent of the company at the seed stage.

Why it matters

The ESOP is how you compete for talent when you cannot match big-company salaries. How large it is, and when it is created, affects both hiring and your own dilution, so it is a real negotiating point in a round.

For example

A startup sets aside a 12 percent option pool at seed, then grants a senior engineer 0.5 percent vesting over four years.

Go deeper

Employee Equity: How Much? AVC · article A practical framework for how much equity to grant employees at each level, the real-world numbers behind the option pool. Open avc.com →

Related terms

Also in Starting Up

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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