Dilution
What is Option Pool?
Shares reserved for future employee stock grants - typically 10-20% of the cap, expanded at most priced rounds.
The option pool is a reserved chunk of shares earmarked for employee grants. New companies typically reserve 10-15% at incorporation. Each priced round usually requires expanding the pool to ~10% of post-money, with the expansion coming from pre-money (diluting existing shareholders, not the new investor) - the 'option pool shuffle.' The pool size should be sized to your hiring plan: roughly (number of hires before next round) × (typical grant per role).