How big should the pool be?

Large enough to cover planned hiring to the next round, and no larger. Pools of 10–15% post-round are common at seed and Series A, but the right answer comes from a hiring plan with indicative grant sizes, not a rule of thumb.

Why do investors ask for the pool pre-money?

Because a pre-money pool is absorbed by existing holders, which lowers the effective price the investor pays for the same percentage. It is one of the most consequential terms in a term sheet after the valuation itself.

Do unallocated pool shares count as dilution?

Yes, on a fully diluted basis. Investors include the unissued pool in the share count, so authorising a pool dilutes existing holders on paper even before a single option is granted.

Free tool

Option pool calculator

Work out how many new option shares are needed to reach a target unallocated pool after a round — and how much of that increase existing holders absorb, depending on whether the pool is created pre-money or post-money.

Fully diluted shares before the round

Existing unallocated pool shares

Target unallocated pool after the round (%)

Pre-money valuation

Amount raised

Pool treatmentPre-money (existing holders absorb it)Post-money (shared with the new investor)

New pool shares required: 942,857
Price per share: 1.609195
Fully diluted shares after: 12,428,571
Investor ownership: 20.00%
Dilution from the pool increase: 7.59%

How this is calculated

The target pool is expressed as a percentage of the post-round fully diluted total.
A pre-money pool enlarges the share count before pricing, so existing holders absorb it and the price per share falls.
A post-money pool is created after the investor's shares, so the increase is shared by everyone.
Existing unallocated pool shares count toward the target — only the shortfall is created.

Worked example

A company with 9,500,000 fully diluted shares, of which 600,000 are unallocated pool, raises £4m at £16m pre-money and agrees a 10% post-round pool. Around 1,000,000 new pool shares are needed. Created pre-money, existing holders absorb almost all of that; created post-money, the new investor shares the cost.

Assumptions

The pool is expressed as a percentage of the post-round fully diluted share count.
The pool increase is created pre-money and absorbed by existing holders.
All pool shares count as fully diluted whether or not they have been granted.

Limitations

Does not model vesting, leavers, exercise or expiry — a granted option is treated as an outstanding share.
Does not model tax treatment such as EMI, ISO or NSO differences.
Does not distinguish granted from unissued pool shares in the resulting ownership.

Prepared by Perseids for general information. This tool runs on the numbers you enter, stores nothing and uses no company data. Results are illustrative and are not legal, tax or investment advice.

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Frequently asked questions

How big should the pool be?: Large enough to cover planned hiring to the next round, and no larger. Pools of 10–15% post-round are common at seed and Series A, but the right answer comes from a hiring plan with indicative grant sizes, not a rule of thumb.
Why do investors ask for the pool pre-money?: Because a pre-money pool is absorbed by existing holders, which lowers the effective price the investor pays for the same percentage. It is one of the most consequential terms in a term sheet after the valuation itself.
Do unallocated pool shares count as dilution?: Yes, on a fully diluted basis. Investors include the unissued pool in the share count, so authorising a pool dilutes existing holders on paper even before a single option is granted.