"VCs and option pools: Now you're swimming in the deep end - VentureBeat"

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VCs and option pools: Now you're swimming in the deep end - VentureBeat


from Venture Beat: A reader asks:  My co-founder and I have been talking
to some VC firms on Sand Hill Road, and I think we’re pretty close to
getting at least one term sheet.  I read your post a few weeks ago about
how one of the common mistakes startups make dealing with VC’s
is focusing too much on valuation.  You also mentioned there are other
important terms that affect the economics of a financing, including the
size of the option pool.  Can you please explain that?  Our company
never issued any options – and my co-founder and I each own 50 percent
of the shares.  Will the VC firms require an option pool? And, if so,
how will that affect us?


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Dan Walter
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