Ah, the employee option pool. Typically a hot tub housed at the founders' garage which then expands to a full Olympic-sized swimming pool with four swim lanes…oh wait.
The real ESOP is of course the percentage of total company equity set aside to incentivize employees. The standard axiom is that a US tech startup will end up reserving about 20% for employees — but the timing here matters.
Pre-seed companies typically start their pools at 10% and then expand them as further funding comes into the company coffers.
Two things jump out from the chart above. First, there isn't much year-over-year change in option pool sizes across stages. Second, it looks as though the median jumps by 1-1.5% in each successive funding round.
The data above encompasses both software and hardware startups, but there is a tendency for hard tech (hardware, biotech, etc) to have slightly larger option pools at each point along the funding journey.
Of course the option pool size should reflect the amount of equity the founders anticipate needing to grant to new employees (with some buffer and inclusive of refresh grants). If that sounds challenging, don't worry — our Carta Total Compensation product can help!
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Peter Walker
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