An option pool is a block of company shares set aside for future employees, advisors and hires. Early-stage pools are often around 10% to 15% of the company.
Example
Before your seed round, the investor asks for a 10% pool created in the pre-money. On an $8M pre-money with $2M raised, that pool comes out of the founders' share, not the investor's, which lowers your effective pre-money valuation to about $7M.
Why it matters for early-stage founders
The pool is how you hire people you cannot yet pay market salaries. Its size and timing also change how much founders are diluted in a round.
The common mistake
Agreeing to an oversized pool in the pre-money. Size the pool to a real hiring plan for the next 12 to 18 months instead of accepting a round number.
Map your option pool in a cap table
The free cap table template includes a tab for sizing your option pool before and after a round.
Get the cap table template