Term Sheet: Employee Pool
Posted on 07. Jul, 2008 by squareroots in Levers of Valuation
Originally posted on Feld Thoughts “Term Sheet: Voting Rights and Employee Pool” by Brad Feld, reposted with permission.
“Employee Pool: Prior to the Closing, the Company will reserve shares of its Common Stock so that __% of its fully diluted capital stock following the issuance of its Series A Preferred is available for future issuances to directors, officers, employees and consultants. The term “Employee Pool” shall include both shares reserved for issuance as stated above, as well as current options outstanding, which aggregate amount is approximately __% of the Company’s fully diluted capital stock following the issuance of its Series A Preferred.”
The employee pool section is a separate section in order to clarify the capital structure and specifically call out the percentage of the company that will be allocated to the option pool associated with the financing. Since a cap table is almost always included with the term sheet, this section is redundant, but exists so there is no confusion about the size of the option pool.
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