Option Pool
Definition
An option pool is equity reserved for employee compensation, typically 10 to 20 percent of the company, refreshed at financing rounds.
How it comes up in fundraising
Investors commonly require a pool expansion before their money comes in (the “option pool shuffle”), which shifts that dilution onto founders via the pre-money valuation.
Frequently asked questions
What is the option pool shuffle?
Sizing the new pool into the pre-money valuation, so existing holders absorb the dilution rather than the new investor; negotiating a right-sized pool is real money.
How big should the pool be?
Large enough for roughly 18 to 24 months of planned hires; padding beyond the hiring plan quietly costs founders ownership.
Round Funded resources
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