Definition
What is option pool (ESOP)?
An option pool is a block of shares reserved for future employees, advisers and sometimes later cofounders, granted as stock options. Investors often ask for it to be created or enlarged before their round, which dilutes existing holders.
Pool size depends on hiring plans; it is negotiated alongside the valuation because it affects how much the founders are really diluted.
General information, not legal, tax or investment advice.