The Option Pool Shuffle
Written by Harry Prabandham
Curated by Rubric Financial
Last updated
1 / 5
The Pool That Dilutes Only You
- Investors usually require an option pool to be created or topped up as part of a priced round.
- The shuffle: that pool is almost always carved out of the pre-money valuation, so it dilutes existing shareholders, not the new investor.
- A bigger pool at the same pre-money means a lower effective price per share for founders, and it quietly reduces your ownership.
- Founders who do not model this are surprised by their post-round percentage.
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About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
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