Before signing: model two rounds so the pool doesn't cut 56% to 23%
Model the pre-money option pool across seed and Series A before you sign, so the hidden dilution is visible in the term sheet.
The pool line is a hidden round
You are staring at a term sheet that says pre-money option-pool top-up. It looks like a small line, but it is a hidden round.
A pre-money pool top-up creates a new employee pool before the investor's money is counted, so the founders absorb the dilution. A post-money pool is added after the investor's ownership is set, so the investor shares the hit.
Option-pool top-ups appear in more than 70% of equity financings.
Median founding teams kept about 56% fully diluted, counting the employee pool, after seed, 36.1% after Series A, 23% after Series B, and 16.1% after Series C, using rounds raised between 2021 and 2025.
By Series C, the typical founder share is smaller than the employee pool for the first time, with both near the mid-teens of fully diluted shares.
The trap is that the line is easy to miss. The rule is simple: model two rounds before you sign. Negotiate the pool size while the investor still needs you.
A seed term sheet is not the last time the pool appears. The next round will ask for another top-up, and the second hit lands on a smaller base. Build the two-round model before signature.
The two-round model turns the line into two numbers
On the whiteboard, the model converts the pool line, the investor check, and post-money ownership into two numbers: your fully diluted founder ownership after seed and after Series A.
- Lay out the current ownership map. Put founder shares, employee pool, and any prior investors on a single page. You are done when you have one percentage for the founding team, not a spreadsheet of names.
- Convert the pool top-up into founder cost. A 10% pre-money option-pool top-up takes about 6-7% of the founders' existing stake. The output is a single percentage you can subtract before the investor's check.
- Turn the investor check into post-money ownership. Divide the check by the post-money valuation. Finish with an investor percentage, not just a dollar amount.
- Multiply the two dilution hits. Start with your current founding-team percentage. Subtract the pool cost, then apply the investor percentage. The result is one number: your fully diluted ownership after seed.
- Repeat the same math for Series A. Add a second pool top-up and a second investor percentage. The result is a side-by-side view: seed on the left, Series A on the right.
- Check the pool against hiring needs. Ask how many hires the pool funds and what roles those hires fill. You are done when the pool size is tied to a plan, not a blank percentage.
- Put the two-round number in the term sheet. Write the seed and Series A ownership numbers next to the pool line. The term sheet should show the cost of the pool, not just the price of the round.
The investor does not fund a pre-money pool; the founders absorb it.
Keep the math in fully diluted terms. Counting only outstanding shares hides the pool, and the deal looks cheaper.
The pool is a negotiable number
When the term sheet asks for a large pre-money pool, ask for a smaller pool, a post-money pool, or a future top-up tied to hiring milestones. That keeps the current round from becoming a second round.
At Series B, the median AI founding team held 27.3% fully diluted equity, while the median non-AI founding team held 21.8%. Your sector can shift the landing spot, but it does not remove the math.
Send your two-round numbers in the email, then ask for the pool change in writing.
