About the Option Pool Calculator
Investors often ask a startup to create or top up its employee stock option pool before a priced round, so that the pool is counted in the pre-money valuation. This option pool calculator works out how many new option shares must be created to hit a target pool size after the round, the resulting price per share and how much the pool effectively reduces your pre-money valuation.
It is written for founders negotiating a term sheet, finance leads updating the cap table and early employees who want to understand dilution. Enter the headline pre-money valuation, the amount raised, the target post-money pool percentage and your current share count, including any existing unallocated pool.
The calculation follows the standard “pre-money option pool” convention: the new pool dilutes only existing holders, not the new investors. It assumes a single priced round with no SAFEs or notes converting at the same time.
With the default inputs, the new option pool shares to create is 1,428,571. Change any value above to recalculate instantly.
How to use the option pool calculator
- 1Enter the headline pre-money valuation and amount being raised.
- 2Enter the target pool size after the round, usually from the term sheet.
- 3Enter fully diluted shares today and any existing unallocated pool.
- 4Read the new pool shares, share price and effective pre-money.
- 5Compare founder ownership with and without the pool to guide negotiation.
Formula and method
After the round, three groups share the fully diluted cap table: existing holders (excluding the unallocated pool), the option pool and the new investors. Investors own investment ÷ post-money, the pool must equal the target percentage, and existing holders keep whatever is left, so total shares are existing non-pool shares divided by that remaining fraction.
Because the pool is created before the round, its value comes out of the founders’ share rather than the investors’: the effective pre-money is the headline pre-money minus the new pool’s value at the round price. If the existing pool is already large enough, no new shares are created.
- S
- Fully diluted shares before the round
- E
- Existing unallocated pool shares
- Pool%
- Target unallocated pool after the round
- f
- Investor ownership (investment ÷ post-money)
Worked examples
10% pool on an $8M pre, $2M raise
Investors take 20%, the pool 10%, leaving 70% for existing holders: 10M ÷ 0.7 ≈ 14.29M total shares, of which about 1.43M are new pool. The price is $10M ÷ 14.29M = $0.70, so the new pool is worth $1M and the effective pre-money is $7M.
Top up an existing pool to 15%
With 500,000 unallocated shares already in place, about 1.69M more are needed. Investors own 20% of a $15M post-money, the price is about $1.026, and the new shares cut the effective pre-money to roughly $10.26M.
Existing pool already big enough
A 1.5M-share unallocated pool is 12% after the round, above the 10% target, so nothing new is created. The price stays at $8M ÷ 10M = $0.80 and the effective pre-money equals the headline $8M.
Frequently asked questions
What is the option pool shuffle?+
It is the practice of creating or enlarging the employee option pool in the pre-money valuation. The new shares dilute only existing shareholders, which lowers the effective pre-money valuation founders receive.
How big should an option pool be?+
Seed and Series A pools are often around 10–20% of fully diluted shares post-round. The best size is based on a hiring plan: add up the grants you expect to make before the next round rather than picking a round number.
Should the option pool be in the pre-money or post-money?+
Investors usually ask for it in the pre-money so they are not diluted. Founders can negotiate a smaller pool backed by a hiring plan, or ask for part of the pool to be created post-money.
Do granted options count toward the pool target?+
Pool targets in term sheets normally refer to the unallocated (available) pool. Options already granted are part of existing fully diluted shares. Check the definition in your term sheet.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.