Option Pool Line: Pre-Money vs Post-Money Share Counts
Learn how pre-money vs post-money option pools change founder and employee ownership, with exact share counts and a worksheet.
You are reading a term sheet, and the option-pool line sits between the valuation and the share count. It looks routine, but it is a pricing term: where the pool sits changes the exact shares founders and existing shareholders give up.
In a pre-money versus post-money option-pool comparison, founders and existing shareholders can end up with 64% of the company instead of 67%. That is the number to check before you sign.
That gap is the difference between a pool that is priced into the deal and a pool that is treated as a later adjustment.
The rule is simple. Decide whether the pool is pre-money or post-money, then calculate the fully diluted share count before and after the pool, and the difference between those counts. Fully diluted is the total after the pool and other equity are included. A pool is a reserve of shares for future employees; its position changes who is diluted first.
In 71% of 2026 term-sheet cases, an option pool was created or an existing pool was topped up. US practice typically uses a pre-money option pool, whereas UK practice is less uniform.
Pre-money and post-money change the same cap table
The same tests decide the deal: who absorbs the pool, how much ownership founders keep, and how clearly employees can see their future stake. The pool move is the moment the reserve changes the ownership map.
A pre-money pool is created before the investor's purchase, so existing holders carry the reduction before the new investor's percentage is set. The cost is that founders may give up more before the investor's stake is fixed.
A post-money pool is included in the post-money valuation, so the investor's percentage is calculated after the pool exists. The cost is that the investor may push for a larger pool or a lower price to recover the same economics.
For an early employee, the placement matters because your grant comes from a pool that has already changed the ownership structure. Ask whether the pool was created before the investor's stake was set or after it. Your grant percentage is only meaningful against the fully diluted total after the pool.
When the term sheet says only a percentage, ask for the share count. If the company already has a pool, ask whether the deal creates a new pool or adds to the existing one. The answer changes which shareholders are diluted.
The refresh has a payer
Use this worksheet when the term sheet gives you a pool size but not the share count.
- Identify the pool size. The 2026 market norm for option-pool size is 10% to 15% of company equity, with 10% the most frequent choice.
- Determine whether the pool is pre-money or post-money. Ask for the exact share count before the pool and the exact share count after the pool.
- Calculate fully diluted shares before and after the pool. If a company has 10,000,000 fully diluted shares after creating a 10% option pool, the pool holds 1,000,000 shares and the other shareholders hold 9,000,000 shares.
- Assign the refresh to the correct shareholders. If the pool is pre-money, the reduction comes from existing holders before the investor's purchase. If the pool is post-money, the reduction is built into the post-money number.
A percentage without a share count is a promise about future dilution, not a cap-table fact. For a founder negotiating a term sheet, request the pre-money share count, the pool share count, and the post-money share count. For an early employee, ask for the same counts before you accept a grant.
If the investor wants a pool refresh, ask who pays. A refresh can be a new pool or an addition to an existing pool. Keep the counts in the term sheet, and you can answer the ownership question before signature.
