Employee equity
How large should an option pool be before a funding round?
Size the pool from the hiring plan for the period the round is meant to fund, usually the next 18 to 24 months. Investors commonly expect somewhere around 10% post-round at seed and Series A, but the defensible number is bottom-up: list the roles you will hire, attach a typical grant to each, add expected refresh grants, and compare the total with your unallocated pool.
Prepared by Perseids · Published · Updated
Build the number bottom-up
- 1List every role you plan to hire before the next round.
- 2Attach a target grant to each, expressed as a percentage of fully diluted equity.
- 3Add refresh and promotion grants for the existing team.
- 4Subtract the unallocated pool you already have.
- 5The remainder is the increase you actually need.
Why the pre-money pool matters so much
An increase agreed as part of the round is normally created pre-money, meaning existing holders absorb it entirely before the new investor's money is counted. A larger pool is therefore founder dilution presented as a governance detail. If the pool is oversized relative to the hiring plan, that dilution is simply given away.
Rules of thumb, and their limits
| Stage | Commonly seen post-round pool | What actually drives it |
|---|---|---|
| Pre-seed | 5–10% | First few key hires |
| Seed | 10% | Building the founding team |
| Series A | 10–15% | Scaling functions, senior hires |
| Later | 5–10% top-ups | Refresh and retention |
Pre-seed
- Commonly seen post-round pool
- 5–10%
- What actually drives it
- First few key hires
Seed
- Commonly seen post-round pool
- 10%
- What actually drives it
- Building the founding team
Series A
- Commonly seen post-round pool
- 10–15%
- What actually drives it
- Scaling functions, senior hires
Later
- Commonly seen post-round pool
- 5–10% top-ups
- What actually drives it
- Refresh and retention
Treat these as a sanity check on your bottom-up number, not as a substitute for it.
Prepared by Perseids for general information. It is not legal, tax or investment advice — confirm your specific situation with your advisers.
Frequently asked questions
- Can the pool be increased after the round instead?
- Sometimes, if the investor agrees. A post-round increase is shared with the new investor and therefore costs founders less, which is exactly why it is negotiated.
Put this into practice with Perseids.
Model this with your real cap table