What is ESOP pool replenishment?
Nexa Consultancy | Startup & Finance Glossary
As a startup grows and hires more employees, its initial ESOP pool gets depleted. Replenishing the pool means creating more options, which requires shareholder approval and results in dilution for all existing shareholders, including earlier employees.
Startup Example: A Series A startup has used up its 10% ESOP pool. To attract senior talent before its Series B, it needs to get approval from its board and shareholders (including its seed investors) to increase the pool to 15%.
We help manage cap tables and model the impact of such decisions.