Calculate employee option pool sizing and dilution impact
vc2Category: venture-capitalCalculate employee option pool sizing and dilution impact
Founder Ownership
68.3%
Option Pool Value
$1,800,000
Post-Money Valuation
$12,000,000
With a $10,000,000 pre-money valuation and $2,000,000 investment, the post-money valuation is $12,000,000. The 15% option pool worth $1,800,000 creates 0.32% total dilution for founders, reducing their ownership from 100% to 0.68% while investors receive 0.17%.
Option pools reserve equity for employee compensation, typically ranging from 10-20% of post-money valuation depending on company stage and hiring needs. These pools dilute existing shareholders before new investment, meaning founders bear the dilution cost rather than incoming investors. The timing and sizing of option pools significantly impacts founder ownership through subsequent funding rounds.
Strategic option pool sizing balances competitive employee compensation against founder dilution. Larger pools provide hiring flexibility but reduce founder ownership percentage. Most investors expect pools sized to cover 12-24 months of anticipated hires at market-rate equity grants. Companies that undersize pools face additional dilution when creating supplemental pools mid-round, while oversized pools unnecessarily dilute founders without corresponding talent acquisition.
Founder Ownership
68.3%
Option Pool Value
$1,800,000
Post-Money Valuation
$12,000,000
With a $10,000,000 pre-money valuation and $2,000,000 investment, the post-money valuation is $12,000,000. The 15% option pool worth $1,800,000 creates 0.32% total dilution for founders, reducing their ownership from 100% to 0.68% while investors receive 0.17%.
Option pools reserve equity for employee compensation, typically ranging from 10-20% of post-money valuation depending on company stage and hiring needs. These pools dilute existing shareholders before new investment, meaning founders bear the dilution cost rather than incoming investors. The timing and sizing of option pools significantly impacts founder ownership through subsequent funding rounds.
Strategic option pool sizing balances competitive employee compensation against founder dilution. Larger pools provide hiring flexibility but reduce founder ownership percentage. Most investors expect pools sized to cover 12-24 months of anticipated hires at market-rate equity grants. Companies that undersize pools face additional dilution when creating supplemental pools mid-round, while oversized pools unnecessarily dilute founders without corresponding talent acquisition.