Fundraising
Option Pool
Quick definition
Shares reserved for employee equity grants, usually 10-20% of the fully diluted cap table.
The option pool (or equity incentive plan reserve) is a block of shares set aside to grant to employees, advisors, and consultants as options or RSUs. Pools typically run 10-20 percent of the fully diluted company and are topped up at each round. Investors usually require the pool to be created or expanded out of the pre-money valuation, so the dilution falls on existing shareholders rather than the new investor, which is why pool sizing is a real negotiation. Track allocated versus unallocated pool so you know your true room for hires.
Related fundraising terms
SAFE (Simple Agreement for Future Equity)
Convertible instrument commonly used for early-stage rounds.
409A Valuation
Independent valuation of common stock used to set option strike prices.
Cap Table
A record of all ownership interests in your company.
Pro Rata Right
An investor's right to maintain their ownership % in future rounds.
See this in action
Insights, guides, and tools where Option Pool shows up.
Frequently asked questions
- What is Option Pool?
- The option pool (or equity incentive plan reserve) is a block of shares set aside to grant to employees, advisors, and consultants as options or RSUs. Pools typically run 10-20 percent of the fully diluted company and are topped up at each round. Investors usually require the pool to be created or expanded out of the pre-money valuation, so the dilution falls on existing shareholders rather than the new investor, which is why pool sizing is a real negotiation. Track allocated versus unallocated pool so you know your true room for hires.
- Why is Option Pool important for startups?
- Option Pool is a fundraising concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does Option Pool belong to?
- Option Pool is a Fundraising term in the StartupCFO finance glossary — alongside other fundraising concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about Option Pool?
- Beyond this definition, see the related fundraising terms below, or explore StartupCFO's insights and tools that put Option Pool in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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