Thanks to the money from the investor the company now has an employee.
The founder has decided to incentivise the employee by granting them the option to acquire 2 Ordinary shares at an exercise price of £200.
If the optionholder exercises their option then they would need to pay £200 to the company and would be issued with 2 Ordinary shares.
In most situations in private companies optionholders do not exercise their option until the underlying company is sold.
Instead when the company is sold the option is exercised but the optionholder does not pay the exercise price but instead has the exercise price deducted from their proceeds.
It should be noted that the optionholder need not be an employee.
However in the UK employee optionholders can be have special favourabe tax treatment, known as EMI.