What is an option pool?

An option pool is a block of shares reserved for future employee equity grants, typically 10–20% of the company at early stages. Investors usually require the pool to be created or refreshed as part of a round.

The negotiation subtlety is the 'option pool shuffle': when the pool is created pre-money, its dilution falls entirely on existing shareholders rather than being shared with the new investors — effectively lowering the true pre-money price. Sizing the pool to a realistic hiring plan, rather than a round number, is a legitimate founder pushback.