How Much Should You Reserve in the Employee Option Pool

Founders - how much of your company stock should you reserve for the employee pool?

It depends substantially on how mature your company happens to be.

A little bit more about the data in the chart below:

• Only looks at U.S. startups incorporated as C-corps

• Stage refers to the most recent round raised by a company

• # of companies is the total companies we used for this analysis (though not the total on Carta)

You can see the median percentage reserved for employees rises as a company travels up the alphabet venture stack.

Seed companies reserve between 13%-14% for employees, while Series D companies are up around 18%-19%.

Also, isn't pre-seed missing the circle for 25th pct? Indeed. Turns out that 25th pct was 0.0% (lots and lots of super young companies have yet to reserve any shares for employees).

Valid choice if you're focused on building without hires, but as soon as employees come on board you want to compensate them with equity.

Personally, I found the wide distributions in this data pretty fascinating. Why do some companies choose to reserve 10% and some 20% even though they are in the same startup lifecycle? Is it down to the generosity of the founders, something about the expected headcount needs, or what?

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