A founder owns 100% of a company and there are no options outstanding and no option pool for options to be granted later. An investor agrees to acquire a 30% interest in the company, and also requires the creation of a 20% option pool. If the option pool is pre-money, what will be the resulting share of the company held by the founder?

Question

Business

Jazlene Norris

7 April, 01:06

A founder owns 100% of a company and there are no options outstanding and no option pool for options to be granted later. An investor agrees to acquire a 30% interest in the company, and also requires the creation of a 20% option pool. If the option pool is pre-money, what will be the resulting share of the company held by the founder?

+2

Answers (1)

Know the Answer?

Yael Freeman · Answer 1

Share of founder in the company will be 50 %

Explanation:

We have given Initial ownership pattern

Founder owns 100 % of the company

A new investor wants 30% and also option pool of 20% is also required

Now if the option pool is pre-money, then the option pool is created without impacting the desired investor ownership%;

Investor=30%

Option pool=20%

So founder = 100-30-20 = 50 %

So the share of founder in the company will be 50 %