Option Pool Calculator
See exactly how a pre-money option pool costs founders equity - versus a more founder-friendly post-money or split placement.
Round inputs
The agreed value of your company before this round closes.
New capital being raised in this round.
Combined founder ownership today, fully diluted.
Size of the new pool the lead investor is requiring.
Default term-sheet language. Existing shareholders eat the pool dilution.
Cost of each placement, to you
“Value diluted” = founder dilution % × post-money valuation. The difference between pre-money and post-money placements is the cost of the option pool shuffle.
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The hidden cost of the “option pool shuffle”
On nearly every Series A term sheet, the lead investor will require the company to top up the option pool before their money goes in. The pool is sized as a percentage of the post-money - but executed against the pre-money. The result: the founders pay for the pool, and the lead investor gets a cleaner ownership target.
The math, in plain English
Say a fund offers $5M on a $20M pre, with a 10% post-money option pool. The post-money cap is $25M. The fund's 20% is locked in. The 10% pool is created out of the $20M pre, which means existing shareholders (you and your team) collectively go from owning 100% of the pre-money to owning 70% of the post-money - a 30% relative dilution, not 20%.
On a $5M raise, that hidden cost shows up as roughly $2.5M of value transferred from the founders' equity to the new pool. The lead is unaffected.
Three placements, three outcomes
- Pre-money pool (default, founder-hostile): Only existing shareholders dilute. New investor is unaffected.
- Post-money pool (founder-friendly): Everyone, including the new investor, dilutes proportionally for the new pool.
- Split placement (compromise): Half the pool comes from pre-money, half from post-money. Common settlement in negotiations.
How to push back
Walk into the term-sheet meeting with a written 12-18 month hiring plan, an option grant schedule per role, and the resulting pool size you actually need. If the lead is asking for 10% and your plan justifies 6%, you have data to negotiate. Trade pool size for valuation, or pool placement for cap-table cleanliness - every percentage point matters compounded across the company's life.
Frequently asked questions
- What is the option pool shuffle?
- The 'option pool shuffle' is the standard term-sheet practice of expanding the option pool before a priced round closes. Because the new pool comes out of the pre-money valuation, only existing shareholders (founders and prior investors) dilute for it - the new lead investor's stake stays clean. It's a hidden form of dilution that often catches first-time founders off-guard.
- Pre-money vs post-money option pool - what's the difference?
- A pre-money pool is created BEFORE the round closes, so it dilutes only existing shareholders. A post-money pool is created AFTER, so the new investor dilutes proportionally too. Term sheets almost always specify the pool as a percentage of the post-money cap, but executed pre-money - that's the costly default for founders.
- How big should my option pool be?
- A common default is 10% of post-money, but this is rarely justified by the actual hiring plan. The right size = number of hires before the next round × expected option grant per hire. If you only need 4-6 hires before Series B, 5-7% is often enough. Push back on inflated pool requests with a written hiring plan.
- Can I negotiate the option pool placement?
- Yes - and you should. Common moves: argue for a smaller pool tied to a real hiring plan; ask for the pool to be split pre/post (e.g., 50/50); negotiate a higher pre-money to offset pool dilution; or trade pool size for a higher cap on the next round.
- Does the pool always dilute founders?
- Only the pre-money pool does. Already-vested options that founders/team hold don't dilute when the pool grows - they're already counted. Only newly-issued shares (the top-up to reach the agreed pool size) cause dilution to existing holders.
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