Question
Why does the option pool shuffle dilute existing holders?
An option pool is a reserve of shares for future employees and advisors. In many financing negotiations, investors ask for the pool to equal a target percentage after the financing closes.
A pre-money option pool increase is added before the investor price is set. That means the new pool shares are included in the pre-money share count, which can lower the price per share and shift more dilution onto founders and other existing holders.
Pre-money versus post-money pool treatment
With pre-money treatment, existing holders usually absorb the top-up before the investor buys shares. With post-money treatment, the pool target is solved after the financing and the dilution is shared differently in the simplified model.
The important point is not that one label is always better. The important point is that the treatment changes who absorbs the dilution, so it should be modeled explicitly.
Use the calculators
Use the Option Pool Calculator to compare pre-money and post-money pool treatment. Then use the Founder Dilution Calculator to sanity-check how new investment and option-pool changes affect founder ownership.
Methodology and limits
The FounderMath option-pool model uses simplified fully diluted share math. It does not replace a legal cap table, option plan, financing model, or the definitions in actual transaction documents.
Educational-use disclaimer: This page is for educational planning only. It is not legal, tax, accounting, investment, securities, financial, or fundraising advice. Review actual financing documents with qualified counsel and advisors.
Last reviewed July 21, 2026. See Methodology and Sources.