By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
TechziTechziTechzi
  • Home
  • Community
    • Our Review
    • Join Our Slack community
    • Referral: Richieee
    • Referral: 6 for 6
  • Publications
    • Special Report: SE Asian Startup Funding
    • Top 30 Most Funded Southeast Asia Startups
  • Agencies
  • About
    • About us
    • Contact
Search
© 2023 Techzi . All Rights Reserved.
Reading: This is How a Startup Should Structure Its ESOPs…
Share
Font ResizerAa
TechziTechzi
Font ResizerAa
Search
  • Home
  • Community
    • Our Review
    • Join Our Slack community
    • Referral: Richieee
    • Referral: 6 for 6
  • Publications
    • Special Report: SE Asian Startup Funding
    • Top 30 Most Funded Southeast Asia Startups
  • Agencies
  • About
    • About us
    • Contact
Have an existing account? Sign In
Follow US
© 2023 Techzi . All Rights Reserved.
StartupsStrategy

This is How a Startup Should Structure Its ESOPs…

Gagan Singh
Last updated: August 12, 2024 2:01 am
Gagan Singh
Share
3 Min Read
SHARE
Gagan is the CEO of Wows Global, a matchmaking platform for startups and investors in Asia.
Previously he was a board member and Group CFO of Deliveree, one of the fastest growing on-demand logistics companies in SEA.
Guest Author: Gagan Singh

Creating an Employee Stock Option Pool (ESOP) is a crucial step for startups, ensuring alignment with your team’s growth and incentivizing long-term commitment. Here’s a concise guide on establishing an effective ESOP pool:

1. Initial Pool Size:
Start with a pool size between 7.5% to 10% of the company’s total equity before the first institutional financing.

This range is generally sufficient to attract and retain key talent in the early stages.

2. Increasing the Pool Post-Funding:
As the company grows and secures additional institutional funding rounds, be prepared to expand the ESOP pool.

This may be necessary to accommodate new hires, senior management, or additional incentivization.

3. Types of Grants – Options/RSUs:
Determine the right mix of equity instruments. Stock options are common for early-stage startups, providing tax advantages and a clear path to ownership.

Restricted Stock Units (RSUs) may be more appropriate as the company matures, offering more predictable value and simplifying tax implications.

4. Vesting Schedule and Exercise Period:
Typically, a four-year vesting schedule with a one-year cliff is standard, ensuring that employees commit for the long haul.

The exercise period, often lasting 90 days post-termination, should also be clearly defined to avoid confusion.

5. Performance-Based Vesting vs. Time-Based Vesting:
Time-based vesting, where shares vest over a set period, is the most common.

However, performance-based vesting can be a powerful tool to align incentives with specific company goals.

It ties the vesting of shares to the achievement of individual, team, or company-wide performance metrics, creating a direct link between effort and reward.

6. Good Leaver and Bad Leaver Clauses:
It’s essential to distinguish between good leavers (departing amicably, e.g., retirement) and bad leavers (leaving under less favorable circumstances, e.g., misconduct).

These clauses should dictate the treatment of unvested and vested shares, protecting the company’s interests while being fair to the employees.

At WOWS GLOBAL, we offer the best and most affordable ESOP solutions in the market through our digital platform, automating the entire process.

Our platform simplifies the administration and management of your ESOP, ensuring transparency, efficiency, and compliance at every step.

Ready to optimize your ESOP strategy? Contact us at support@wowsglobal.com to learn more about how we can help you design and manage your employee equity plans.

#Startups #ESOP #EmployeeEquity #StartupLife #WOWSGlobal

TAGGED:div5

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Share This Article
Facebook X Copy Link Print
Share
Previous Article Jumia’s $100 Million Boost to Break E-Commerce Barrier
Next Article Malaysia: The Next Big Thing in Tech? Khailee Ng Explains

Subscribe to our newsletter to get our newest articles instantly

Please enable JavaScript in your browser to complete this form.
=

Stay Connected

XFollow
InstagramFollow
YoutubeSubscribe
TiktokFollow

Latest News

Techzi is Pausing
Media December 24, 2024
Twitch Pioneer Emmett Shear Launches Mysterious AI Venture
AI December 24, 2024
OpenAI CEO Labels Musk a ‘Bully’ in Latest Tech Titan Clash
AI December 24, 2024
AI Revolution Could Spark Live Entertainment Boom
Culture December 24, 2024

You Might also Like

Culturee-CommerceFashion

Carousell Strengthens Luxury Segment with LuxLexicon Acquisition

April 4, 2024
Mobility

EV’s Take on SouthEast Asia

April 25, 2024
AIStartups

Locofy Launches AI Design-to-Code with “Lightning” Product

February 17, 2024
AI

TikTok Cuts Hundreds of Jobs in AI-Driven Shift

October 18, 2024
FintechGaming

VNG Withdraws US IPO Plan, Ending Listing Speculations

February 12, 2024
AI

AI World Models: The Next Frontier in Machine Intelligence

December 24, 2024
EdutechFintech

Pakistani Fintech EduFi Banks $6.1M to Disrupt Student Loans

February 12, 2024
Social MediaTravel

The IShowSpeed Effect: How a 19-Year-Old’s Chaotic Southeast Asian Tour Is Revolutionizing Travel Content

November 1, 2024
e-Commerce

JD.com Posts Revenue Growth, Announces Share Buyback Plan

March 12, 2024
AI

Meta’s Video Seal: A New Shield Against Digital Deception

December 18, 2024
Social Media

Zuckerberg Goes Viral With Unlikely T-Pain Musical Collaboration

November 18, 2024
e-Commerce

Shopify Sues Shopline Over Alleged Storefront Template Copying

May 21, 2024

Techzi

SE Asian tech news: Free & Comprehensive. Read more

Quick Links

  • Logistics
  • Marketplace
  • Mobility
  • Startups
  • VC
  • Food tech
  • Gaming
  • Health-Tech
  • Media
  • Social Media
  • SaaS
  • Travel

Quick Links

  • AI
  • Edutech
  • Climate
  • Creators
  • Crypto & Web3
  • Culture
  • Deep Tech
  • e-Commerce
  • FAANG
  • Fashion
  • Fintech

Techzi Tech Newsletter

FREE and Curated by Tech Insiders

Legal

Privacy Policy

Terms & conditions

TechziTechzi
Follow US
© 2024 Techzi . All Rights Reserved.
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?