Why Give Stock Options to Employees Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Startups give stock options to employees as part of their compensation package. Most startups create an options pool at the Series A fundraise. A founder-friendly term sheet will have both the investors and the founders pay for the options pool. In an investor-friendly term sheet, the founders will pay for the options out of their equity. It’s important to create an options pool as it provides incentive to the employees. It allows the founders to provide another means of compensation. Without it, the founders will need to compensate employees out of cash. In a startup, cash is precious and should be conserved. The options pool takes pressure off the cash reserves. Options should be vested over a four-year timeframe. This ensures the employees stay with the company long enough to earn the shares. Consider creating a stock options pool for employees in your company. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today. _________________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.