ESOPFunding
Employee Stock Option Plan
(ESOP)
Definition
A programme giving employees the right to buy company shares at a predetermined price (the "exercise price") in the future, after a vesting period. Used to attract and retain talent when cash salaries are limited.
Why founders care
Create an ESOP pool (10–15%) before investor negotiations — not after. If you create it post-investment, only founders get diluted, not the investors. Standard vesting: 4 years with 1-year cliff.
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