Incentive Stock Options (ISO Pool) - How much to earmark?


2

Based on your experiences, I'm wondering if any of you had any advice on the percentage can I expect to earmark for ISO pool when incorporating? 10%? 15%? 20%?

Thanks!

Incentives Stock Options

asked Mar 3 '10 at 06:31
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Newyuppie
441 points

3 Answers


4

There's no one answer. As a founder, you want to set aside the smallest possible amount for the option pool, because this option pool dilutes YOU, not the investor... and if you don't use it all, the "leftover" options benefit you AND the investor, so the investors get some "negative dilution" that they never earned.

This is all explained clearly by Nivi in The Option Pool Shuffle.

I successfully argued for a 10% option pool in my series A on the grounds that we didn't need to hire too many people. The best thing to do is make a list of new employees you plan to hire in the first 18-24 months (not founders) and how many shares you need for each.

If you DO need more options later to make a key hire, you can still issue them, it just dilutes everyone, which is fair.

answered Apr 20 '10 at 11:50
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Joel Spolsky
13,472 points

1

The typical employee stock option pool is 20%. It might vary a bit but it's wise, at each round, to set aside 20%.

answered Mar 3 '10 at 07:20
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Jarie Bolander
11,421 points
  • thank you for your comment, and for the TAG edit... I didn't have enough points to create additional tags.. – Newyuppie 9 years ago
  • No problem. Just remember that it will vary a bit. Usually between 15%-20%. – Jarie Bolander 9 years ago

0

For empirical data on option pool size and equity allocation, check out compstudy: https://www.compstudy.com/ The 2008 summary report is here: http://www.scribd.com/doc/7494620/2008-CompStudy-Report-in-Technology 15-20% is typical.

answered Apr 23 '10 at 01:27
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Henry The Hengineer
4,316 points

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Incentives Stock Options