Option Pool Dilution Calculator
Compare pre-money vs post-money option pool top-ups at a priced round — see exactly how much extra dilution founders take when investors require a "pre-money pool refresh."
Cap Table Comparison
| Holder | Pre-Money Pool % | Post-Money Pool % |
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The Pre-Money Pool Trick — How Investors Get a Discount
When you raise a priced round, the term sheet almost always requires creating or expanding the option pool to a target percentage (typically 10-20%) of the post-round company. The crucial detail: the pool refresh is structured as pre-money, meaning the dilution comes out of founders' shares before the new investor's stake is calculated. The investor's percentage is calculated AFTER the pool exists, so they're not diluted by it. This is one of the most expensive pieces of negotiation in a startup financing — and most founders don't notice it during term-sheet review.
The economic reality: a "pre-money pool refresh" is equivalent to lowering the effective pre-money valuation. If the term sheet says "$10M pre-money with a 15% pool refresh" and you're starting with no pool, the real pre-money valuation paid by the investor is closer to $8.5M because the founder-funded pool dilutes the shares-per-dollar that the investor pays. Sophisticated founders push back during term-sheet negotiations; less-experienced founders sign the standard NVCA-style term sheet and lose 3-5 percentage points without realizing it.
How the Math Differs — Pre vs Post-Money Pool
Pre-money pool: founders create the new pool shares before the investor's check, so founders' percentage shrinks first. Then the investor buys their percentage at the same price-per-share. Net result: 100% of pool dilution sits on founders. Post-money pool: investor agrees their fraction can include the pool. Pool dilution is then split proportionally between founders and the investor, like any other normal dilution. Founders save 3-7 percentage points on a typical 15% pool refresh.
Why do investors prefer pre-money? Because their stake gets locked in BEFORE pool dilution. It's a clean economic transfer from founders to investors disguised as a governance choice. The legal documents (e.g., NVCA model term sheets) treat pre-money pool as the default; it takes explicit negotiation to change it.
Scenario — $2.5M on $10M Pre-Money With 15% Pool
Starting cap table: 8M founder + 1M existing pool = 9M shares. Pre-money pool path: pool grows to 15% post-round, all extra shares come from founders. Founders end up around 64-66%, investor 20%, pool 15%. Post-money pool path: same 15% pool but split proportionally between founders and the new investor. Founders end up around 67-70%, investor about 17-18%, pool 15%. The 3-4 percentage points of "saved dilution" is worth $300K-$1M+ at exit on a typical Series A company.
For a stacked example with SAFE notes also converting, see our SAFE note dilution calculator. For overall startup math, the SaaS runway calculator tells you how long the new money lasts before the next dilutive round.
Negotiation Tactics — How to Push Back
Three tactics work in practice: (1) Ask for a smaller pool — 10% instead of 15% buys you 3-5 percentage points immediately. (2) Push for "carve-out" pool top-up post-money. (3) Use the bottoms-up hiring model — list every hire planned in next 18-24 months with grant sizes, then total backwards. Investors often agree the proposed pool is bigger than needed when they see the math. Always ask the investor to specify whose hires the pool funds — pool meant for "next round of hires" should be fundamentally post-money funded.
Last updated May 2026. Sources: nvca.org, ycombinator.com.