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What are the percentage guidelines for issuing stock options in an early stage, seed money(from a family office fund), life science company?

The investor owns 40%, while the 3 founders own 60%. Thank you.

Answers

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

More specifics would be helpful. Are you looking for the size of the entire option pool, the size of grants for particular titles, the split between founders, investors and others, or something else? Lot of ground to cover here.

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

For starters, I typically look at how many people the company will be hiring between "now" and the next estimated funding event. At a minimum you will want to create an option pool that can take you to that next round given reasonable assumptions. Frequently I find that this is in the neighborhood of 10% of outstanding shares. But you can build an equity model right in to your headcount growth model and build your own estimate. The biggest hits are for senior execs, so spend extra time considering your hiring for e-staff.

Option grants vary by stage of company and factors specific to the person being hired. Rock stars get more than first timers, etc., so individual grants to, say, a VP of Marketing could run from .5% to 5% depending on how early the company is and how good the person is. Same holds for all of the e-staff positions. And for lower-level positions as well, but the numbers get smaller fast for non-execs. The exception is for the folks who really drive product. In tech, for instance, that's the engineers - and thus they get more share than other contributors, all else being equal.

As for position-by-position guidelines, those are tough to come by unless your fundign source has something or unless you pay a firm for it.

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