An investor that requires a generous option pool may seem not a big deal for a founder. However, if put into the pre-money valuation it substantially lowers the effective valuation of an investment and consequently the stake that the founder holds post-closing. This blogpost explains how it works and how misunderstanding is created (and solved). Creation of an option pool In most cases an option pool is set up when a venture capital investor participates in a company. It is usually a requirement of the investor based on a strong belief that the company’s employees will work harder and be [...]
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