Reserved equity has an ownership cost.
An option pool reserves shares for employees and other eligible service providers. On a fully diluted basis, a newly created pool reduces existing holders’ ownership even before the options are granted or exercised.
The timing of a pool increase matters. A pre-money pool top-up in a financing can fall primarily on existing shareholders. This tool isolates pool creation so that its effect is clear, without combining it with financing terms.
The formula, made clear.
- New pool target
- Total newly reserved options as a percentage after the pool is created.
- Fully diluted
- Assumes all reserved options are included in the share total.
Put the numbers in context.
Creating a 10% pool reduces an 80% holder to 72%. Other existing holders retain 18%, and the new pool represents 10%.
| Input | Example value |
|---|---|
| Your current ownership | 80% |
| New pool target | 10% |
| Your ownership after pool creation | 72% |
What this calculation assumes
An entirely new pool with no existing reserve, created independently of a financing. Not a pre-money pool top-up model; ungranted, granted and outstanding options need separate treatment in a real cap table.
What to consider next.
For a financing, establish whether the pool target is measured before or after the round and who bears the increase.
How we approach financial models →